H. Rept. 112-678 - 112th Congress (2011-2012)
September 19, 2012, As Reported by the Veterans' Affairs Committee

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House Report 112-678 - AMENDING TITLE 38, UNITED STATES CODE, TO IMPROVE THE SUPERVISION OF FIDUCIARIES OF VETERANS UNDER THE LAWS ADMINISTERED BY THE SECRETARY OF VETERANS AFFAIRS, AND FOR OTHER PURPOSES




[House Report 112-678]
[From the U.S. Government Printing Office]


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-678

======================================================================


 
 AMENDING TITLE 38, UNITED STATES CODE, TO IMPROVE THE SUPERVISION OF 
FIDUCIARIES OF VETERANS UNDER THE LAWS ADMINISTERED BY THE SECRETARY OF 
                VETERANS AFFAIRS, AND FOR OTHER PURPOSES

                                _______
                                

 September 19, 2012.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

    Mr. Miller of Florida, from the Committee on Veterans' Affairs, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 5948]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Veterans' Affairs, to whom was referred 
the bill (H.R. 5948) to amend title 38, United States Code, to 
improve the supervision of fiduciaries of veterans under the 
laws administered by the Secretary of Veterans Affairs, and for 
other purposes, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................    12
Background and Need for Legislation..............................    13
Hearings.........................................................    22
Subcommittee Consideration.......................................    23
Committee Consideration..........................................    23
Committee Votes..................................................    23
Committee Oversight Findings.....................................    24
Statement of General Performance Goals and Objectives............    24
New Budget Authority, Entitlement Authority, and Tax Expenditures    24
Earmarks and Tax and Tariff Benefits.............................    24
Committee Cost Estimate..........................................    24
Congressional Budget Office Estimate.............................    24
Federal Mandates Statement.......................................    28
Advisory Committee Statement.....................................    28
Constitutional Authority Statement...............................    28
Applicability to Legislative Branch..............................    28
Section-by-Section Analysis of the Legislation...................    28
Changes in Existing Law Made by the Bill as Reported.............    32

                               Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. TABLE OF CONTENTS.

  The table of contents for this Act is as follows:

Sec. 1. Table of Contents.
Sec. 2. Improvement of fiduciaries for veterans.
Sec. 3. Establishment of Place of Remembrance at Arlington National 
Cemetery.
Sec. 4. Furnishing caskets and urns for deceased veterans with no known 
next of kin.
Sec. 5. Improved communication between Department of Veterans Affairs 
and medical examiners and funeral directors.
Sec. 6. Report on compliance of Department of Veterans Affairs with 
industry standards for caskets and urns.
Sec. 7. Exclusion of persons convicted of committing certain sex 
offenses from interment or memorialization in national cemeteries, 
Arlington National Cemetery, and certain State veterans' cemeteries and 
from receiving certain funeral honors.
Sec. 8. Veterans freedom of conscience protection.
Sec. 9. Authority for the performance of medical disability 
examinations by contract physicians.
Sec. 10. Provision of access to case-tracking information.
Sec. 11. Notification by the Secretary of Veterans Affairs of 
individuals whose sensitive personal information is involved in a data 
breach.
Sec. 12. Limitation on bonuses for Department of Veterans Affairs 
employees who violate Federal civil laws or regulations.
Sec. 13. Limitation on awards and bonuses to employees of the 
Department of Veterans Affairs.
Sec. 14. Sense of Congress on Patriot Guard Riders.
Sec. 15. Sense of Congress honoring Korean War veterans.

SEC. 2. IMPROVEMENT OF FIDUCIARIES FOR VETERANS.

  (a) Appointment and Supervision.--
          (1) Section 5502 of title 38, United States Code, is amended 
        to read as follows:

``Sec. 5502. Appointment of fiduciaries

  ``(a) Appointment.--(1) Where it appears to the Secretary that the 
interest of the beneficiary would be served thereby, payment of 
benefits under any law administered by the Secretary may be made 
directly to the beneficiary or to a relative or some other fiduciary 
for the use and benefit of the beneficiary, regardless of any legal 
disability on the part of the beneficiary.
  ``(2) When in the opinion of the Secretary, a temporary fiduciary is 
needed in order to protect the benefits provided to the beneficiary 
under any law administered by the Secretary while a determination of 
incompetency is being made or appealed or a fiduciary is appealing a 
determination of misuse, the Secretary may appoint one or more 
temporary fiduciaries for a period not to exceed 120 days. If a final 
decision has not been made within 120 days, the Secretary may not 
continue the appointment of the fiduciary without obtaining a court 
order for appointment of a guardian, conservator, or other fiduciary 
under the authority provided in section 5502(b) of this title.
  ``(b) Appeals.--(1) If the Secretary determines a beneficiary to be 
mentally incompetent for purposes of appointing a fiduciary under this 
chapter, the Secretary shall provide such beneficiary with a written 
statement detailing the reasons for such determination.
  ``(2) A beneficiary whom the Secretary has determined to be mentally 
incompetent for purposes of appointing a fiduciary under this chapter 
may appeal such determination.
  ``(c) Modification.--(1) A beneficiary for whom the Secretary 
appoints a fiduciary under this chapter may, at any time, request the 
Secretary to--
          ``(A) remove the fiduciary so appointed; and
          ``(B) have a new fiduciary appointed.
  ``(2) The Secretary shall comply with a request under paragraph (1) 
unless the Secretary determines that the request is not made in good 
faith.
  ``(3) The Secretary shall ensure that any removal or new appointment 
of a fiduciary under paragraph (1) does not delay or interrupt the 
beneficiary's receipt of benefits administered by the Secretary.
  ``(d) Independence.--A fiduciary appointed by the Secretary shall 
operate independently of the Department to determine the actions that 
are in the interest of the beneficiary.
  ``(e) Predesignation.--A veteran may predesignate a fiduciary by--
          ``(1) submitting written notice to the Secretary of the 
        predesignated fiduciary; or
          ``(2) submitting a form provided by the Secretary for such 
        purpose.
  ``(f) Appointment of Non-predesignated Fiduciary.--If a beneficiary 
designates an individual to serve as a fiduciary under subsection (e) 
and the Secretary appoints an individual not so designated as the 
fiduciary for such beneficiary, the Secretary shall notify such 
beneficiary of--
          ``(1) the reason why such designated individual was not 
        appointed; and
          ``(2) the ability of the beneficiary to modify the appointed 
        fiduciary under subsection (c).
  ``(g) Priority of Appointment.--In appointing a fiduciary under this 
chapter, if a beneficiary does not designate a fiduciary pursuant to 
subsection (e), to the extent possible the Secretary shall appoint a 
person who is--
          ``(1) a relative of the beneficiary;
          ``(2) appointed as guardian of the beneficiary by a court of 
        competent jurisdiction; or
          ``(3) authorized to act on behalf of the beneficiary under a 
        durable power of attorney.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 55 of title 38, United States Code, is 
        amended by striking the item relating to section 5502 and 
        inserting the following:

``5502. Appointment of fiduciaries.''.

  (b) Supervision.--
          (1) In general.--Chapter 55 of title 38, United States Code, 
        is amended by inserting after section 5502, as amended by 
        subsection (a)(1), the following new section:

``Sec. 5502A. Supervision of fiduciaries

  ``(a) Commission.--(1)(A) In a case in which the Secretary determines 
that a commission is necessary in order to obtain the services of a 
fiduciary in the best interests of a beneficiary, the Secretary may 
authorize a fiduciary appointed by the Secretary to obtain from the 
monthly benefits provided to the beneficiary a reasonable commission 
for fiduciary services rendered, but the commission for any month may 
not exceed the lesser of the following amounts:
  ``(i) The amount that equals three percent of the monthly monetary 
benefits under laws administered by the Secretary paid on behalf of the 
beneficiary to the fiduciary.
  ``(ii) $35.
  ``(B) A commission paid under this paragraph may not be derived from 
any award to a beneficiary regarding back pay or retroactive benefits 
payments.
  ``(C) A commission may not be authorized for a fiduciary who receives 
any other form of remuneration or payment in connection with rendering 
fiduciary services for benefits under this title on behalf of the 
beneficiary.
  ``(D) In accordance with section 6106 of this title, a commission may 
not be paid to a fiduciary if the Secretary determines that the 
fiduciary misused any benefit payments of a beneficiary.
  ``(E) If the Secretary determines that the fiduciary has misused any 
benefit or payments of a beneficiary, the Secretary may revoke the 
fiduciary status of the fiduciary.
  ``(2) Where, in the opinion of the Secretary, any fiduciary receiving 
funds on behalf of a Department beneficiary is acting in such a number 
of cases as to make it impracticable to conserve properly the estates 
or to supervise the persons of the beneficiaries, the Secretary may 
refuse to make future payments in such cases as the Secretary may deem 
proper.
  ``(b) Court.--Whenever it appears that any fiduciary, in the opinion 
of the Secretary, is not properly executing or has not properly 
executed the duties of the trust of such fiduciary or has collected or 
paid, or is attempting to collect or pay, fees, commissions, or 
allowances that are inequitable or in excess of those allowed by law 
for the duties performed or expenses incurred, or has failed to make 
such payments as may be necessary for the benefit of the ward or the 
dependents of the ward, then the Secretary may appear, by the 
Secretary's authorized attorney, in the court which has appointed such 
fiduciary, or in any court having original, concurrent, or appellate 
jurisdiction over said cause, and make proper presentation of such 
matters. The Secretary, in the Secretary's discretion, may suspend 
payments to any such fiduciary who shall neglect or refuse, after 
reasonable notice, to render an account to the Secretary from time to 
time showing the application of such payments for the benefit of such 
incompetent or minor beneficiary, or who shall neglect or refuse to 
administer the estate according to law. The Secretary may require the 
fiduciary, as part of such account, to disclose any additional 
financial information concerning the beneficiary (except for 
information that is not available to the fiduciary). The Secretary may 
appear or intervene by the Secretary's duly authorized attorney in any 
court as an interested party in any litigation instituted by the 
Secretary or otherwise, directly affecting money paid to such fiduciary 
under this section.
  ``(c) Payment of Certain Expenses.--Authority is hereby granted for 
the payment of any court or other expenses incident to any 
investigation or court proceeding for the appointment of any fiduciary 
or other person for the purpose of payment of benefits payable under 
laws administered by the Secretary or the removal of such fiduciary and 
appointment of another, and of expenses in connection with the 
administration of such benefits by such fiduciaries, or in connection 
with any other court proceeding hereby authorized, when such payment is 
authorized by the Secretary.
  ``(d) Temporary Payment of Benefits.--All or any part of any benefits 
the payment of which is suspended or withheld under this section may, 
in the discretion of the Secretary, be paid temporarily to the person 
having custody and control of the incompetent or minor beneficiary, to 
be used solely for the benefit of such beneficiary, or, in the case of 
an incompetent veteran, may be apportioned to the dependent or 
dependents, if any, of such veteran. Any part not so paid and any funds 
of a mentally incompetent or insane veteran not paid to the chief 
officer of the institution in which such veteran is a patient nor 
apportioned to the veteran's dependent or dependents may be ordered 
held in the Treasury to the credit of such beneficiary. All funds so 
held shall be disbursed under the order and in the discretion of the 
Secretary for the benefit of such beneficiary or the beneficiary's 
dependents. Any balance remaining in such fund to the credit of any 
beneficiary may be paid to the beneficiary if the beneficiary recovers 
and is found competent, or if a minor, attains majority, or otherwise 
to the beneficiary's fiduciary, or, in the event of the beneficiary's 
death, to the beneficiary's personal representative, except as 
otherwise provided by law; however, payment will not be made to the 
beneficiary's personal representative if, under the law of the 
beneficiary's last legal residence, the beneficiary's estate would 
escheat to the State. In the event of the death of a mentally 
incompetent or insane veteran, all gratuitous benefits under laws 
administered by the Secretary deposited before or after August 7, 1959, 
in the personal funds of patients trust fund on account of such veteran 
shall not be paid to the personal representative of such veteran, but 
shall be paid to the following persons living at the time of 
settlement, and in the order named: The surviving spouse, the children 
(without regard to age or marital status) in equal parts, and the 
dependent parents of such veteran, in equal parts. If any balance 
remains, such balance shall be deposited to the credit of the 
applicable current appropriation; except that there may be paid only so 
much of such balance as may be necessary to reimburse a person (other 
than a political subdivision of the United States) who bore the 
expenses of last sickness or burial of the veteran for such expenses. 
No payment shall be made under the two preceding sentences of this 
subsection unless claim therefor is filed with the Secretary within 
five years after the death of the veteran, except that, if any person 
so entitled under said two sentences is under legal disability at the 
time of death of the veteran, such five-year period of limitation shall 
run from the termination or removal of the legal disability.
  ``(e) Escheatment.--Any funds in the hands of a fiduciary appointed 
by a State court or the Secretary derived from benefits payable under 
laws administered by the Secretary, which under the law of the State 
wherein the beneficiary had last legal residence would escheat to the 
State, shall escheat to the United States and shall be returned by such 
fiduciary, or by the personal representative of the deceased 
beneficiary, less legal expenses of any administration necessary to 
determine that an escheat is in order, to the Department, and shall be 
deposited to the credit of the applicable revolving fund, trust fund, 
or appropriation.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 55 of title 38, United States Code, is 
        amended by inserting after the item relating to section 5502 
        the following new item:

``5502A. Supervision of fiduciaries.''.

  (c) Definition of Fiduciary.--Section 5506 of title 38, United States 
Code is amended--
          (1) by striking ``For purposes'' and inserting ``(a) For 
        purposes''; and
          (2) by adding at the end the following new subsection:
  ``(b)(1) For purposes of subsection (a), the term `person' includes 
any--
          ``(A) State or local government agency whose mission is to 
        carry out income maintenance, social service, or health care-
        related activities;
          ``(B) any State or local government agency with fiduciary 
        responsibilities; or
          ``(C) any nonprofit social service agency that the Secretary 
        determines--
                  ``(i) regularly provides services as a fiduciary 
                concurrently to five or more individuals; and
                  ``(ii) is not a creditor of any such individual.
  ``(2) The Secretary shall maintain a list of State or local agencies 
and nonprofit social service agencies under paragraph (1) that are 
qualified to act as a fiduciary under this chapter. In maintaining such 
list, the Secretary may consult the lists maintained under section 
807(h) of the Social Security Act (42 U.S.C. 1007(h)).''.
  (d) Qualifications.--Section 5507 of title 38, United States Code, is 
amended to read as follows:

``Sec. 5507. Inquiry, investigations, and qualification of fiduciaries

  ``(a) Investigation.--Any certification of a person for payment of 
benefits of a beneficiary to that person as such beneficiary's 
fiduciary under section 5502 of this title shall be made on the basis 
of--
          ``(1) an inquiry or investigation by the Secretary of the 
        fitness of that person to serve as fiduciary for that 
        beneficiary to be conducted in advance of such certification 
        and in accordance with subsection (b);
          ``(2) adequate evidence that certification of that person as 
        fiduciary for that beneficiary is in the interest of such 
        beneficiary (as determined by the Secretary under regulations);
          ``(3) adequate evidence that the person to serve as fiduciary 
        protects the private information of a beneficiary in accordance 
        with subsection (d)(1); and
          ``(4) the furnishing of any bond that may be required by the 
        Secretary, in accordance with subsection (f).
  ``(b) Elements of Investigation.--(1) In conducting an inquiry or 
investigation of a proposed fiduciary under subsection (a)(1), the 
Secretary shall conduct--
          ``(A) a face-to-face interview with the proposed fiduciary by 
        not later than 30 days after the date on which such inquiry or 
        investigation begins; and
          ``(B) a background check of the proposed fiduciary to--
                  ``(i) in accordance with paragraph (2), determine 
                whether the proposed fiduciary has been convicted of a 
                crime; and
                  ``(ii) determine whether the proposed fiduciary will 
                serve the best interest of the beneficiary, including 
                by conducting a credit check of the proposed fiduciary 
                and checking the records under paragraph (5).
  ``(2) The Secretary shall request information concerning whether that 
person has been convicted of any offense under Federal or State law. If 
that person has been convicted of such an offense, the Secretary may 
certify the person as a fiduciary only if the Secretary finds that the 
person is an appropriate person to act as fiduciary for the beneficiary 
concerned under the circumstances.
  ``(3) The Secretary shall conduct the background check described in 
paragraph (1)(B)--
          ``(A) each time a person is proposed to be a fiduciary, 
        regardless of whether the person is serving or has served as a 
        fiduciary; and
          ``(B) at no expense to the beneficiary.
  ``(4) Each proposed fiduciary shall disclose to the Secretary the 
number of beneficiaries that the fiduciary acts on behalf of.
  ``(5) The Secretary shall maintain records of any person who has--
          ``(A) previously served as a fiduciary; and
          ``(B) had such fiduciary status revoked by the Secretary.
  ``(6)(A) If a fiduciary appointed by the Secretary is convicted of a 
crime described in subparagraph (B), the Secretary shall notify the 
beneficiary of such conviction by not later than 14 days after the date 
on which the Secretary learns of such conviction.
  ``(B) A crime described in this subparagraph is a crime--
          ``(i) for which the fiduciary is convicted while serving as a 
        fiduciary for any person;
          ``(ii) that is not included in a report submitted by the 
        fiduciary under section 5509(a) of this title; and
          ``(iii) that the Secretary determines could affect the 
        ability of the fiduciary to act on behalf of the beneficiary.
  ``(c) Investigation of Certain Persons.--(1) In the case of a 
proposed fiduciary described in paragraph (2), the Secretary, in 
conducting an inquiry or investigation under subsection (a)(1), may 
carry out such inquiry or investigation on an expedited basis that may 
include giving priority to conducting such inquiry or investigation. 
Any such inquiry or investigation carried out on such an expedited 
basis shall be carried out under regulations prescribed for purposes of 
this section.
  ``(2) Paragraph (1) applies with respect to a proposed fiduciary who 
is--
                  ``(A) the parent (natural, adopted, or stepparent) of 
                a beneficiary who is a minor;
                  ``(B) the spouse or parent of an incompetent 
                beneficiary;
                  ``(C) a person who has been appointed a fiduciary of 
                the beneficiary by a court of competent jurisdiction;
                  ``(D) being appointed to manage an estate where the 
                annual amount of veterans benefits to be managed by the 
                proposed fiduciary does not exceed $3,600, as adjusted 
                pursuant to section 5312 of this title; or
                  ``(E) a person who is authorized to act on behalf of 
                the beneficiary under a durable power of attorney.
  ``(d) Protection of Private Information.--(1) A fiduciary shall take 
all reasonable precautions to--
          ``(A) protect the private information of a beneficiary, 
        including personally identifiable information; and
          ``(B) securely conducts financial transactions.
  ``(2) A fiduciary shall notify the Secretary of any action of the 
fiduciary that compromises or potentially compromises the private 
information of a beneficiary.
  ``(e) Potential Misuse of Funds.--(1) If the Secretary has reason to 
believe that a fiduciary may be misusing all or part of the benefit of 
a beneficiary, the Secretary shall--
          ``(A) conduct a thorough investigation to determine the 
        veracity of such belief; and
          ``(B) if such veracity is established, transmit to the 
        officials described in paragraph (2) a report of such 
        investigation.
  ``(2) The officials described in this paragraph are the following:
          ``(A) The Attorney General.
          ``(B) Each head of a Federal department or agency that pays 
        to a fiduciary or other person benefits under any law 
        administered by such department of agency for the use and 
        benefit of a minor, incompetent, or other beneficiary.
  ``(f) Bond.--In requiring the furnishing of a bond under subsection 
(a)(4), the Secretary shall--
          ``(1) ensure that any such bond is not paid using any funds 
        of the beneficiary; and
          ``(2) consider--
                  ``(A) the care a proposed fiduciary has taken to 
                protect the interests of the beneficiary; and
                  ``(B) the capacity of the proposed fiduciary to meet 
                the financial requirements of the bond without 
                sustaining hardship.
  ``(g) List of Fiduciaries.--Each regional office of the Veterans 
Benefits Administration shall maintain a list of the following:
          ``(1) The name and contact information of each fiduciary, 
        including address, telephone number, and email address.
          ``(2) With respect to each fiduciary described in paragraph 
        (1)--
                  ``(A) the date of the most recent background check 
                and credit check performed by the Secretary under this 
                section;
                  ``(B) the date that any bond was paid under this 
                section;
                  ``(C) the name, address, and telephone number of each 
                beneficiary the fiduciary acts on behalf of; and
                  ``(D) the amount that the fiduciary controls with 
                respect to each beneficiary described in subparagraph 
                (C).''.
  (e) Annual Receipt of Payments.--
          (1) In general.--Section 5509 of title 38, United States 
        Code, is amended--
                  (A) in subsection (a)--
                          (i) by striking ``may require a fiduciary to 
                        file a'' and inserting ``, subject to 
                        regulations prescribed pursuant to subsection 
                        (f), shall require a fiduciary to file an 
                        annual''; and
                          (ii) by adding at the end the following new 
                        sentence: ``The Secretary shall transmit such 
                        annual report or accounting to the beneficiary 
                        and any legal guardian of such beneficiary.'';
                  (B) by adding at the end the following new 
                subsections:
  ``(c) Matters Included.--An annual report or accounting under 
subsection (a) shall include the following:
          ``(1) For each beneficiary that a fiduciary acts on behalf 
        of--
                  ``(A) the amount of the benefits of the beneficiary 
                accrued during the year, the amount spent, and the 
                amount remaining; and
                  ``(B) if the fiduciary serves the beneficiary with 
                respect to benefits not administered by the Secretary, 
                an accounting of all sources of benefits or other 
                income the fiduciary oversees for the beneficiary.
          ``(2) A list of events that occurred during the year covered 
        by the report that could affect the ability of the fiduciary to 
        act on behalf of the beneficiary, including--
                  ``(A) the fiduciary being convicted of any crime;
                  ``(B) the fiduciary declaring bankruptcy; and
                  ``(C) any judgments entered against the fiduciary.
  ``(d) Random Audits.--The Secretary shall annually conduct random 
audits of fiduciaries who receive a commission pursuant to subsection 
5502A(a)(1) of this title.
  ``(e) Status of Fiduciary.--If a fiduciary includes in the annual 
report events described in subsection (c)(2), the Secretary may take 
appropriate action to adjust the status of the fiduciary as the 
Secretary determines appropriate, including by revoking the fiduciary 
status of the fiduciary.
  ``(f) Regulations.--(1) In prescribing regulations to carry out this 
section, the Secretary, in consultation with the Under Secretary for 
Benefits and the Under Secretary for Health, shall ensure that the care 
provided by a fiduciary described in paragraph (2) to a beneficiary is 
not diminished or otherwise worsened by the fiduciary complying with 
this section.
  ``(2) A fiduciary described in this paragraph is a fiduciary who, in 
addition to acting as a fiduciary for a beneficiary, provides care to 
the beneficiary pursuant to this title (including such care provided 
under section 1720G of this title).''; and
                  (C) by striking the section heading and inserting the 
                following: ``Annual reports and accountings of 
                fiduciaries''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 55 of title 38, United States Code, is 
        amended by striking the item relating to section 5509 and 
        inserting the following new item:

``5509. Annual reports and accountings of fiduciaries.''.

  (f) Repayment of Misused Benefits.--Section 6107(a)(2)(C) of title 
38, United States Code, is amended by inserting before the period the 
following: ``, including by the Secretary not acting in accordance with 
section 5507 of this title''.
  (g) Annual Reports.--Section 5510 of title 38, United States Code, is 
amended by striking ``The Secretary shall include in the Annual 
Benefits Report of the Veterans Benefits Administration or the 
Secretary's Annual Performance and Accountability Report'' and 
inserting ``Not later than July 1 of each year, the Secretary shall 
submit to the Committees on Veterans' Affairs of the House of 
Representatives and the Senate a separate report containing''.
  (h) Report.--Not later than one year after the date of the enactment 
of this Act, the Secretary of Veterans Affairs shall submit to the 
Committee on Veterans' Affairs of the Senate and the Committee on 
Veterans' of the House of Representatives a comprehensive report on the 
implementation of the amendments made by this Act, including--
          (1) detailed information on the establishment of new policies 
        and procedures pursuant to such amendments and training 
        provided on such policies and procedures; and
          (2) a discussion of whether the Secretary should provide 
        fiduciaries with standardized financial software to simplify 
        reporting requirements.

SEC. 3. ESTABLISHMENT OF PLACE OF REMEMBRANCE AT ARLINGTON NATIONAL 
                    CEMETERY.

  (a) Establishment Authorized.--The Secretary of the Army may 
establish at an appropriate location in Arlington National Cemetery a 
Place of Remembrance for the interment of cremated fragments of the 
remains of members of the Armed Forces who died in the circumstances 
specified in subsection (c) when one of the conditions specified in 
subsection (d) applies with respect to the remains.
  (b) Regulations; Design.--The Secretary of the Army shall--
          (1) prescribe such regulations as may be necessary to carry 
        out this section; and
          (2) determine how the Place of Remembrance shall be designed.
  (c) Covered Circumstances.--The Secretary of the Army shall suggest 
that the Place of Remembrance be for the cremated fragments of remains 
of members of the Armed Forces who died--
          (1) in any war or contingency operation prior to or after the 
        date of the enactment of this Act; or
          (2) in the line of duty prior to or after the date of the 
        enactment of this Act, consistent with regulations prescribed 
        by the Secretary with respect to burial at Arlington National 
        Cemetery.
  (d) Remains Authorized for Interment.--Subsection (a) applies to 
fragments of the remains of a deceased member of the Armed Forces 
described in such subsection (or fragments reasonable believed to be 
from the remains of a deceased member of the Armed Forces described in 
such subsection) that--
          (1) are unidentifiable by use of DNA testing or other means 
        because of the condition of the fragments;
          (2) are unclaimed after a reasonable period of time;
          (3) are identified and authorized for interment in the Place 
        of Remembrance by the person designated under section 1482(c) 
        of title 10, United States Code, to direct disposition of the 
        remains of the member; or
          (4) are designated as ``No Further Pursuit'' remains in cases 
        in which the family of a deceased member has indicated to the 
        Secretary of Army that the family does not want to be consulted 
        when fragments of the remains of the member are found.

SEC. 4. FURNISHING CASKETS AND URNS FOR DECEASED VETERANS WITH NO KNOWN 
                    NEXT OF KIN.

  (a) In General.--Section 2306 of title 38, United States Code, is 
amended--
          (1) by redesignating subsections (f) and (g) as subsections 
        (g) and (h), respectively;
          (2) by inserting after subsection (e) the following new 
        subsection (f):
  ``(f) The Secretary shall furnish a casket or urn, of such quality as 
the Secretary considers appropriate for a dignified burial, for burial 
in a national cemetery of a deceased veteran described in section 
2414(b) of this title.''; and
          (3) in subsection (h), as redesignated by paragraph (1), by 
        adding at the end the following new paragraph:
  ``(4) A casket or urn may not be furnished under subsection (f) for 
burial of a person described in section 2411(b) of this title.''.
  (b) Effective Date.--Subsections (f) and (h)(4) of section 2306 of 
title 38, United States Code, as added by subsection (a), shall take 
effect on the date of the enactment of this Act and shall apply with 
respect to deaths occurring on or after such date.

SEC. 5. IMPROVED COMMUNICATION BETWEEN DEPARTMENT OF VETERANS AFFAIRS 
                    AND MEDICAL EXAMINERS AND FUNERAL DIRECTORS.

  (a) In General.--Chapter 24 of title 38, United States Code, is 
amended by adding at the end the following new section:

``Sec. 2414. Communication between Department of Veterans Affairs and 
                    medical examiners and funeral directors

  ``(a) Required Information.--With respect to each deceased veteran 
described in subsection (b) who is transported to a national cemetery 
for burial, the Secretary shall ensure that the local medical examiner, 
funeral director, county service group, or other entity responsible for 
the body of the deceased veteran before such transportation submits to 
the Secretary the following information:
          ``(1) Whether the deceased veteran was cremated.
          ``(2) The steps taken to ensure that the deceased veteran has 
        no next of kin.
  ``(b) Deceased Veteran Described.--A deceased veteran described in 
this subsection is a deceased veteran whom the Secretary determines--
          ``(1) that there is no next of kin or other person claiming 
        the body of the deceased veteran; and
          ``(2) does not have sufficient resources to cover burial and 
        funeral expenses.
  ``(c) Determination of Sufficient Resources.--If the Secretary is 
unable to make a reasonable determination of the amount of the 
resources of a deceased veteran under subsection (b)(2), the Secretary 
shall deem such resources to be an amount that is not sufficient to 
cover burial and funeral expenses.''.
  (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by inserting after the item relating to section 
2413 the following new item:

``2414. Communication between Department of Veterans Affairs and 
medical examiners and funeral directors.''.

  (c) Effective Date.--Section 2414 of title 38, United States Code, as 
added by subsection (a), shall take effect on the date of the enactment 
of this Act and shall apply with respect to deaths occurring on or 
after the date that is 180 days after the date of the enactment of this 
Act.

SEC. 6. REPORT ON COMPLIANCE OF DEPARTMENT OF VETERANS AFFAIRS WITH 
                    INDUSTRY STANDARDS FOR CASKETS AND URNS.

  (a) In General.--Not later than 180 days after the date of the 
enactment of this Act, the Secretary of Veterans Affairs shall submit 
to the Committee on Veterans' Affairs of the Senate and the Committee 
on Veterans' Affairs of the House of Representatives a report on the 
compliance of the Department of Veterans Affairs with industry 
standards for caskets and urns.
  (b) Elements.--The report required by subsection (a) shall include 
the following:
          (1) A description of industry standards for caskets and urns.
          (2) An assessment of compliance with such standards at 
        National Cemeteries administered by the Department with respect 
        to caskets and urns used for the interment of those eligible 
        for burial at such cemeteries.

SEC. 7. EXCLUSION OF PERSONS CONVICTED OF COMMITTING CERTAIN SEX 
                    OFFENSES FROM INTERMENT OR MEMORIALIZATION IN 
                    NATIONAL CEMETERIES, ARLINGTON NATIONAL CEMETERY, 
                    AND CERTAIN STATE VETERANS' CEMETERIES AND FROM 
                    RECEIVING CERTAIN FUNERAL HONORS.

  (a) Prohibition Against.--Section 2411(b) of title 38, United States 
Code, is amended by adding at the end the following new paragraph:
          ``(4) A person--
                  ``(A) who has been convicted of a Federal or State 
                crime causing the person to be a tier III sex offender 
                for purposes of the Sex Offender Registration and 
                Notification Act (42 U.S.C. 16901 et seq.);
                  ``(B) who, for such crime, is sentenced to a minimum 
                of life imprisonment; and
                  ``(C) whose conviction is final (other than a person 
                whose sentence was commuted by the President or 
                Governor of a State, as the case may be).''.
  (b) Conforming Amendments.--Section 2411(a)(2) of such title is 
amended--
          (1) by striking ``or (b)(2)'' each place it appears and 
        inserting ``, (b)(2), or (b)(4)''; and
          (2) by striking ``capital'' each place it appears.
  (c) Effective Date.--The amendments made by this section shall apply 
with respect to interments and memorializations that occur on or after 
the date of the enactment of this Act.

SEC. 8. VETERANS FREEDOM OF CONSCIENCE PROTECTION.

  Section 2404 of title 38, United States Code, is amended by adding at 
the end the following new subsection:
  ``(h)(1) With respect to the interment or funeral, memorial service, 
or ceremony of a deceased individual at a national cemetery, the 
Secretary shall ensure that--
          ``(A) the expressed wishes of the next of kin or other agent 
        of the deceased individual are respected and given appropriate 
        deference when evaluating whether the proposed interment or 
        funeral, memorial service, or ceremony affects the safety and 
        security of the national cemetery and visitors to the cemetery;
          ``(B) to the extent possible, all appropriate public areas of 
        the cemetery, including committal shelters, chapels, and 
        benches, may be used by the family of the deceased individual 
        for contemplation, prayer, mourning, or reflection; and
          ``(C) during such interment or funeral, memorial service, or 
        ceremony, the family of the deceased individual may display any 
        religious or other symbols chosen by the family.
  ``(2) Subject to regulations prescribed by the Secretary under 
paragraph (5), including such regulations ensuring the security of a 
national cemetery, the Secretary shall provide to any military or 
volunteer veterans honor guard, including such guards belonging to a 
veterans service organization or other non-governmental group that 
provides services to veterans, access to public areas of a national 
cemetery if such access is requested by the next of kin or other agent 
of a deceased individual whose interment or funeral, memorial service, 
or ceremony is being held in such cemetery.
  ``(3) With respect to the interment or funeral, memorial service, or 
ceremony of a deceased individual at a national cemetery, the Secretary 
shall notify the next of kin or other agent of the deceased individual 
of funeral honors available to the deceased veteran, including such 
honors provided by any military or volunteer veterans honor guard 
described in paragraph (2).
  ``(4) Any person aggrieved by a violation of this subsection or any 
regulation prescribed pursuant to this subsection may in a civil action 
in an appropriate Federal court obtain any appropriate relief against 
the Federal Government with respect to the violation. Standing to 
assert a claim or defense under this subsection shall be governed by 
the general rules of standing under Article III of the Constitution.
  ``(5) The Secretary shall prescribe regulations to carry out this 
subsection.''.

SEC. 9. AUTHORITY FOR THE PERFORMANCE OF MEDICAL DISABILITY 
                    EXAMINATIONS BY CONTRACT PHYSICIANS.

  Section 704(c) of the Veterans Benefits Act of 2003 (38 U.S.C. 5101 
note) is amended by striking ``December 31, 2012'' and inserting 
``December 31, 2017''.

SEC. 10. PROVISION OF ACCESS TO CASE-TRACKING INFORMATION.

  (a) In General.--Chapter 59 of title 38, United States Code, is 
amended by adding at the end the following:

``Sec. 5906. Provision of access to case-tracking information

  ``(a) In General.--(1) In accordance with subsection (b), the 
Secretary shall provide a covered employee with access to the case-
tracking system to provide a veteran with information regarding the 
status of a claim submitted by such veteran, regardless of whether such 
employee is acting under a power of attorney executed by such veteran.
  ``(2) In providing a covered employee with access to the case-
tracking system under paragraph (1), the Secretary shall ensure--
          ``(A) that such access--
                  ``(i) is provided in a manner that does not allow 
                such employee to modify the data contained in such 
                system; and
                  ``(ii) does not include access to medical records; 
                and
          ``(B) that each time a covered employee accesses such system, 
        the employee must certify that such access is for official 
        purposes only.
  ``(b) Privacy Certification Course.--The Secretary may not provide a 
covered employee with access to the case-tracking system under 
subsection (a)(1) unless the covered employee has successfully 
completed a certification course on privacy issues provided by the 
Secretary.
  ``(c) Treatment of Disclosure.--The access to information by a 
covered employee pursuant to subsection (a)(1) shall be deemed to be--
          ``(1) a covered disclosure under section 552a(b) of title 5; 
        and
          ``(2) a permitted disclosure under regulations promulgated 
        under section 264(c) of the Health Insurance Portability and 
        Accountability Act of 1996 (42 U.S.C. 1320d-2 note).
  ``(d) Definitions.--In this section:
          ``(1) The term `case-tracking system' means the system of the 
        Department of Veterans Affairs that provides information 
        regarding the status of a claim submitted by a veteran.
          ``(2) The term `covered employee' means--
                  ``(A) an employee of a Member of Congress who assists 
                the constituents of the Member with issues regarding 
                departments or agencies of the Federal Government; or
                  ``(B) an employee of a State or local governmental 
                agency (including a veterans service officer) who, in 
                the course of carrying out the responsibilities of such 
                employment, assists veterans with claims for any 
                benefit under the laws administered by the 
                Secretary.''.
  (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by adding at the end the following new item:

``5906. Provision of access to case-tracking information.''.

SEC. 11. NOTIFICATION BY THE SECRETARY OF VETERANS AFFAIRS OF 
                    INDIVIDUALS WHOSE SENSITIVE PERSONAL INFORMATION IS 
                    INVOLVED IN A DATA BREACH.

  (a) In General.--Subchapter III of chapter 57 of title 38, United 
States Code is amended by inserting after section 5724 the following 
new section:

``Sec. 5724A. Data breach notification

  ``(a) Notification Requirement.--Except as provided in subsection 
(d), in the event of a data breach with respect to sensitive personal 
information that is processed or maintained by the Secretary, by not 
later than 10 business days after the date on which the Secretary 
learns of the data breach, the Secretary shall notify the appropriate 
committees of Congress and each individual whose sensitive personal 
information is involved in the data breach is notified of the data 
breach. If the Secretary determines that providing such notification 
within 10 business days is not feasible due to circumstances necessary 
to accurately identify the individuals whose sensitive personal 
information is involved in the data breach or to prevent further breach 
or unauthorized disclosure and reasonably restore the integrity of the 
data system the Secretary shall provide such notification not later 
than 15 business days after the date on which the Secretary learns of 
the data breach.
  ``(b) Contracts for Data Processing or Maintenance.--If the Secretary 
enters into a contract for the performance of any Department function 
that requires access to sensitive personal information, the Secretary 
shall require as a condition of the contract that the contractor agree 
to provide notification of data breaches in the same manner as required 
of the Secretary under subsection (a).
  ``(c) Method and Content of Notification.--(1) Notification provided 
to an individual under subsection (a) shall be provided clearly and 
conspicuously by one of the following methods:
          ``(A) Written notification.
          ``(B) Notification by email or other electronic means, if the 
        Secretary's primary method of communication with the individual 
        is by email or such other electronic means.
  ``(2) Regardless of the method by which notification is provided to 
an individual under paragraph (1), such notification shall include--
          ``(A) a description of the sensitive personal information 
        involved in the data breach;
          ``(B) a telephone number that the individual may use, at no 
        cost to the individual, to contact an appropriate employee of 
        the Department to inquire about the data breach or the 
        individual's sensitive personal information maintained by the 
        Department;
          ``(C) notice that the individual is entitled to receive, at 
        no cost to such individual, credit protection services under 
        section 5724 of this title;
          ``(D) the toll-free contact telephone numbers and addresses 
        for the major credit reporting agencies; and
          ``(E) a toll-free telephone number and website address 
        whereby the individual may obtain information regarding 
        identity theft.
  ``(d) Notification of General Public.--The Secretary, acting through 
the Office of Public Affairs of the Department, shall notify the 
general public concerning any data breach involving sensitive personal 
information by not later than 10 business days after the date on which 
the Secretary learns of the data breach, unless the Secretary 
determines that to do so is not feasible due to circumstances necessary 
to accurately identify the individuals whose sensitive personal 
information is involved in the data breach or to prevent further breach 
or unauthorized disclosure and reasonably restore the integrity of the 
data system, such notification shall be made as soon as possible.
  ``(e) Appropriate Committees of Congress.--In this section, the term 
`appropriate committees of Congress' means the Committee on Veterans 
Affairs' of the House of Representatives and the Committee on Veterans' 
Affairs of the Senate.''.
  (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by inserting after the item relating to section 
5724 the following new item:

``5724A. Data breach notification.''.

  (c) Effective Date.--The amendments made by this section shall apply 
with respect to a data breach occurring on or after the date that is 90 
days after the date of the enactment of this Act.

SEC. 12. LIMITATION ON BONUSES FOR DEPARTMENT OF VETERANS AFFAIRS 
                    EMPLOYEES WHO VIOLATE FEDERAL CIVIL LAWS OR 
                    REGULATIONS.

  (a) In General.--Chapter 7 of title 38, United States Code, is 
amended by adding at the end the following new section:

``Sec. 713. Limitation on bonuses

  ``(a) In General.--(1) The Secretary shall ensure that no employee of 
the Department who, during any year, knowingly violates any law, 
regulation, or policy described in paragraph (2) receives a bonus for 
or during that year.
  ``(2) A law, regulation, or policy described in this paragraph is any 
of the following:
          ``(A) A Federal civil law or Federal regulation, including 
        such civil laws or regulations covered under the Federal 
        Acquisition Regulation and the Veterans Affairs Acquisition 
        Regulation.
          ``(B) An internal policy of the Department.
  ``(b) Certification.--The Secretary shall annually certify to 
Congress that each bonus awarded by the Secretary during the previous 
year was awarded in accordance with subsection (a)(1).
  ``(c) Bonus Defined.--For purposes of this section, the term `bonus' 
includes--
          ``(1) a retention incentive;
          ``(2) a retention incentive payment;
          ``(3) a retention incentive award; and
          ``(4) any other incentive requiring approval from the Central 
        Office Human Resource Service, the Chief Business Office 
        Workforce Management, or the Corporate Senior Executive 
        Management Office.''.
  (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by adding at the end the following new item:

``713. Limitation on bonuses.''.

SEC. 13. LIMITATION ON AWARDS AND BONUSES TO EMPLOYEES OF THE 
                    DEPARTMENT OF VETERANS AFFAIRS.

  For each of fiscal years 2013 through 2017, the Secretary of Veterans 
Affairs may not pay more than $357,613,229 in awards or bonuses under 
chapter 45 or 53 of title 5, United States Code, or any other awards or 
bonuses authorized under such title.

SEC. 14. SENSE OF CONGRESS ON PATRIOT GUARD RIDERS.

  (a) Findings.--Congress finds the following:
          (1) The Patriot Guard Riders were founded in 2005 in Mulvane, 
        Kansas, with a mission to show sincere respect for fallen 
        members of the Armed Forces by attending their funeral services 
        as invited guests of the member's family.
          (2) The Patriot Guard Riders have more than 220,000 members 
        nationwide from all walks of life.
          (3) The Patriot Guard Riders shield the mourning family and 
        friends from interruptions created by any protestor or group of 
        protestors.
          (4) The Patriot Guard Riders engage only in respectful acts 
        in honor of a fallen member of the Armed Forces.
          (5) The members of the Patriot Guard Riders willingly give 
        their time, energy, and money to respect the memory of fallen 
        members of the Armed Forces.
          (6) The men and women of the Armed Forces who fight to 
        preserve freedom deserve the utmost respect and support of the 
        American people.
          (7) The Patriot Guard Riders provide a unique service that 
        honors fallen members of the Armed Forces and their families.
  (b) Sense of Congress.--Congress--
          (1) commends the Patriot Guard Riders and all of the other 
        volunteers involved in shielding the mourning family and 
        friends of a fallen member of the Armed Forces from 
        interruptions created by any protestor or group of protestors; 
        and
          (2) recognizes the sacrifices that veterans, members of the 
        Armed Forces, and their families have made, and continue to 
        make, on behalf of the United States.

SEC. 15. SENSE OF CONGRESS HONORING KOREAN WAR VETERANS.

  (a) Findings.--Congress finds the following:
          (1) On June 25, 1950, Communist North Korea invaded the 
        Republic of Korea with approximately 135,000 troops to initiate 
        the Korean War.
          (2) Nearly 1,800,000 members of the Armed Forces of the 
        United States served along with the forces of the Republic of 
        Korea and 20 other Allied nations under the United Nations 
        Command to defend freedom and democracy in the Korean 
        Peninsula.
          (3) The United States suffered 36,574 dead and 103,284 
        wounded during the Korean War in some of the most horrific 
        conditions in the history of warfare.
          (4) Almost 60 years have passed since the signing of the 
        cease-fire agreement at Panmunjom on July 27, 1953, and the 
        Korean peninsula still technically remains in a state of war.
          (5) The Korean War has become a ``Forgotten War'' for many 
        Americans.
          (6) Many of the members of the Armed Forces who fought in the 
        Korean War returned home without the fanfare that greeted the 
        heroes of World Wars I and II.
          (7) Korean War veterans deserve to be recognized by all 
        Americans for their honorable service during the Korean War in 
        defense of democracy and freedom.
          (8) The tide of communism on the Korean Peninsula was halted, 
        liberty triumphed over tyranny, and the Republic of Korea has 
        developed into a modern and prosperous democracy because of the 
        selfless sacrifice of the Korean War veterans.
          (9) The people of the United States and the Republic of Korea 
        are eternally grateful to the Korean War veterans.
          (10) It is important to include the history of the Korean War 
        in the curricula of American schools so that future generations 
        never forget the sacrifices of the Korean War veterans.
          (11) The Department of Defense 60th Anniversary of the Korean 
        War Commemoration Committee will implement a national campaign 
        to honor the Korean War veterans, remember those Korean War 
        veterans still counted among the missing in action, and educate 
        the American people concerning the ongoing relevance of the 
        Korean War.
          (12) The commemorative campaign will include ceremonies in 
        the United States and the Republic of Korea in recognition of 
        June 25, 1950, and July 27, 1953, and a national media and 
        outreach campaign for Veterans Day 2012 to honor the Korean War 
        veterans.
  (b) Sense of Congress.--On the occasion of the 60th anniversary of 
the Korean War, Congress recognizes the importance of the contributions 
and sacrifices made by veterans of the Korean War.

                          Purpose and Summary

    H.R. 5948, the Veterans Fiduciary Reform Act of 2012, was 
introduced by Oversight and Investigations Subcommittee 
Chairman Bill Johnson on June 12, 2012. H.R. 5948, as amended, 
incorporates provisions of that bill, as well as provisions of 
H.R. 5735, introduced by Mr. Stivers of Ohio; H.R. 6073, 
introduced by Mr. Bilirakis of Florida; H.R. 2355, introduced 
by Ms. Hartzler of Missouri; H.R. 2720, introduced by Rep. 
Culberson of Texas; H.R. 5880, introduced by Mr. Runyan of New 
Jersey; H.R. 5881, introduced by Mr. Runyan of New Jersey; H.R. 
3730, introduced by Mr. Donnelly of Indiana; H. R. 4481, 
introduced by Mr. Roe of Tennessee; H. Res. 669, introduced by 
Mr. Gingrey of Georgia; and H. Res. 618, introduced by Mr. 
Rangel of New York. Together, these provisions would improve 
fiduciary services for veterans; establish a Place of 
Remembrance at Arlington National Cemetery; bar certain 
convicted sex offenders from burial in veterans cemeteries; 
honor a veteran's family's preferences during ceremonies at VA 
national cemeteries; extend the contract authority for private 
physicians to conduct medical disability examinations; improve 
accessibility to case-tracking information on pending claims; 
modify notification procedures to affected veterans in the 
event of a data breach at VA; establish penalties for VA 
employees who violate acquisition regulations; make reasonable 
modifications to the overall amount of bonuses at VA; and 
commend Patriot Guard Riders throughout the nation.

                  Background and Need for Legislation


           SECTION 2--IMPROVEMENT OF FIDUCIARIES FOR VETERANS

    Chapter 55 of Title 38, United States Code, provides 
authority for the Department of Veterans Affairs (VA) Fiduciary 
Program, which is intended to help veterans and other VA 
beneficiaries who are deemed by the Secretary of Veterans 
Affairs to be mentally incompetent for purposes of handling 
their financial affairs. In such cases, the Secretary appoints 
a fiduciary who, by statute, is only authorized to receive and 
manage benefits administered by the Secretary on behalf of the 
beneficiary. The fiduciary is responsible for ensuring that a 
beneficiary's bills are paid on time and that a beneficiary 
receives money to pay for food, shelter, clothing, medical 
expenses, and other necessities.
    The framework established in chapter 55 allows the 
Department a great deal of latitude in implementing the 
Fiduciary Program. During a hearing before the Subcommittee on 
Oversight and Investigations on February 9, 2012, multiple 
cases of mismanagement of veterans' funds by VA-appointed 
fiduciaries and mismanagement of the program overall by VA were 
discussed.
    Among the numerous deficiencies highlighted within the VA 
Fiduciary Program at that hearing included: fiduciaries 
embezzling veterans' funds; fiduciaries refusing to pay a 
veteran's utility bills; fiduciaries taking more than the 
amount authorized by law as commission for services; convicted 
felons appointed as fiduciaries; and fiduciaries telling 
veterans to conserve money by not running air conditioning 
during summer months.
    Prior to the February 2012 hearing on VA's Fiduciary 
Program, VA's standard form 21-4703, outlining how a fiduciary 
is to account for a veteran beneficiary's funds, directed that 
a fiduciary must clear all expenses through VA before 
disbursing any funds to the veteran. When the problems this 
requirement created were highlighted during the hearing, VA 
witnesses acknowledged the hindrance this restrictive provision 
placed on fiduciaries attempting to act in the best interest of 
the veteran, and the provision was subsequently removed after 
the hearing. However, many of the other faults within the 
program continue to exist unchecked despite the Subcommittee on 
Oversight and Investigations repeatedly bringing these issues 
to VA's attention, not only with the policies and regulations 
of the program but also in the cases of many individual 
veterans.
    Section 2 of H.R. 5948, as amended, overhauls the VA 
Fiduciary Program, making many necessary reforms to address 
problems identified before, during, and after the February 2012 
hearing and realigns chapter 55 to a structure more consistent 
with other amended sections of title 38.
    Currently, once a VA beneficiary is appointed a fiduciary, 
the beneficiary has the right to appeal the decision. The 
appeals process within VA's Fiduciary Program is difficult, 
slow, and often results in healthy, capable veterans being 
unable to remove themselves from the program. Section 2 of H.R. 
5948, as amended, would allow a veteran to appeal the finding 
of incompetence at any time. This provision not only enables a 
veteran to remain out of the fiduciary program if medical 
evidence supports such a position, it also allows a veteran who 
has sufficiently recovered at a later time to return to 
managing his or her own financial affairs.
    Section 2 of H.R. 5948, as amended, would also allow a 
veteran to request the appointment of a new fiduciary if it is 
perceived that the current fiduciary is not properly executing 
the duty of the position or is abusing the veteran's funds in 
any way. The Secretary may deny the removal of an appointed 
fiduciary if it is determined that the request was not made in 
good faith, and shall ensure that the delivery of benefits is 
not interrupted if a previous fiduciary is removed and a new 
one appointed.
    Section 2 of H.R. 5948, as amended, would also enable a 
veteran to designate a preferred fiduciary ahead of time, such 
as a family member or guardian, should the Secretary determine 
that the appointment of a fiduciary is necessary and in the 
veteran's best interest. While the Secretary would not be 
required to appoint the designated fiduciary, the reason for 
not appointing that fiduciary would have to be presented in 
writing to the veteran as would a notice of the veteran's right 
to appeal the appointment. In many cases, a veteran may already 
have a family member or court-appointed guardian acting as a 
fiduciary for other benefits, and in cases where the veteran 
was happy with the fiduciary's performance of those duties, a 
sensible approach would be to maintain that relationship.
    Under certain circumstances, the Secretary may decide that 
a paid fiduciary is in a veteran's best interest. Section 
5502(a)(2) of title 38, United States Code, states that a 
fiduciary may receive a commission for his or her efforts, but 
that commission may not exceed four percent of the monetary 
benefits a beneficiary receives in one year. Investigations, 
hearings, and media reports identified many problems in the 
Fiduciary Program arising from paid fiduciaries receiving more 
than the amount authorized under law, including receiving 
commissions from retroactive and lump sum payments to veterans. 
Further, evidence also revealed VA field examiners directing 
fiduciaries to take income from non-VA benefits as well, an 
action explicitly not authorized in law. In many of these 
instances, the veteran beneficiary still did not receive basic 
funding for food, clothing, and shelter that should have been 
administered by the fiduciary.
    Following the February 2012 hearing, the Director of VA's 
Pension and Fiduciary Service issued Fast Letter 12-10 
restating the limits on commissions paid to fiduciaries. As 
this letter simply restated current law and policy, which were 
frequently violated throughout the nation, the Fast Letter 
conveyed little expectation of effecting change. In addition, 
the commission rate paid to VA-appointed fiduciaries is already 
higher than that paid by the Social Security Administration 
(SSA) under the Representative Payee Program, the SSA's 
equivalent to VA's Fiduciary Program. In comparison to the 
approximately 120,000 beneficiaries under VA's Fiduciary 
Program, the Social Security Representative Payee Program deals 
with approximately 7.8 million beneficiaries.
    Section 2 of H.R. 5489, as amended, reduces the commission 
rate paid to fiduciaries, if the Secretary determines that a 
paid fiduciary is in the best interest of the veteran, to not 
more than 3% of the veteran's monthly benefits, or $35 per 
month, whichever is less. Any desire by VA to increase this 
rate would require congressional authorization. This commission 
rate will give VA's Fiduciary Program a similar structure to 
the SSA's Representative Payee Program and will reduce the 
profit motive of predatory fiduciaries. The section also 
clarifies that commission payments are not to be derived from 
retroactive or lump sum payments; that fiduciaries who are 
determined to misuse a veteran's benefits may not receive 
commissions; that fiduciaries found to be misusing funds may 
have their status as fiduciaries revoked; that the Secretary 
may seek compensation in a court of law from fiduciaries found 
to misuse benefits or fiduciaries who fail to adequately 
account for a veteran's benefits; and that funds remaining with 
a paid fiduciary after a veteran's passing shall escheat to the 
federal government. Reducing the financial incentive for a 
fiduciary to apply to VA's Fiduciary Program provides further 
assurance that participants are working in the best interest of 
vulnerable veterans.
    During a hearing before the Oversight and Investigations 
Subcommittee on June 20, 2012, VA opposed reducing the 
commission, citing the need for paid fiduciaries when no other 
options were available. VA also opposed the provision that it 
consider state, local, and non-profit agencies that 
historically have provided fiduciary services to necessary 
individuals, citing the maintenance of such a database as 
burdensome. Section 2 of H.R. 5948, as amended, addresses these 
concerns by authorizing VA to use the same database used by the 
Social Security Administration, which serves a vastly larger 
number of individuals. The inclusion of these agencies provides 
VA greatly increased options for appointing a fiduciary should 
the Secretary determine that appointing a preferred fiduciary 
would not be in the veteran's best interest.
    During investigations and hearings, concerns also arose 
regarding the qualifications of fiduciaries. Documented cases 
existed of convicted felons serving as fiduciaries as well as 
fiduciaries with no knowledge of or training regarding their 
duties to the veteran. Many cases of embezzlement of a 
veteran's funds could have been prevented with a basic 
background check of a fiduciary, but VA frequently used its 
authority to waive the current background check requirement for 
appointment of a fiduciary, and failed to follow up at a later 
point in time to determine the suitability of the appointed 
fiduciary.
    Section 2 of H.R. 5948, as amended, improves the 
qualification process for fiduciaries as well as oversight of 
fiduciaries already appointed by requiring the Secretary to 
perform civil and criminal background investigations and a 
face-to-face interview prior to certifying an individual as a 
fiduciary; provide evidence that the individual would serve the 
best interest of the veteran; would protect the veteran's 
sensitive personal information; and would furnish a bond when 
required by the Secretary before certifying an individual as a 
fiduciary; and conduct a background investigation each time an 
individual is appointed as a fiduciary. To address concerns 
that performing background checks may slow the fiduciary 
appointment process, authority is provided to the Secretary to 
expedite background checks where necessary.
    Many documented cases also exist where a veteran had never 
met nor heard from his or her fiduciary, in addition to cases 
where VA experienced difficulty contacting fiduciaries it had 
appointed. This lack of accountability on the part of 
fiduciaries, coupled with VA's lack of oversight, contributed 
to veterans not receiving the necessary funds to pay basic 
utilities and predatory fiduciaries making a profit at the 
expense of the veteran. To address this, Section 2 of H.R. 
5489, as amended, contains a provision that requires an annual 
accounting by fiduciaries that will consist of benefits earned, 
benefits disbursed, and the remaining balance as well as other 
sources of income for that veteran that the fiduciary controls. 
The fiduciary must also report any events affecting his or her 
ability to serve the veteran including criminal convictions, 
bankruptcy filings, and judgments filed against the fiduciary, 
and any events reported in the annual accounting may be 
considered by the Secretary in determining a fiduciary's 
ability to serve the best interest of the veteran. This report 
would then be transmitted to the veteran beneficiary or 
guardian.

SECTION 3--ESTABLISHMENT OF PLACE OF REMEMBRANCE AT ARLINGTON NATIONAL 
                                CEMETERY

    Section 3 of H.R. 5948, as amended, is derived from H.R. 
5735, and would create a new monument at Arlington National 
Cemetery known as the Place of Remembrance.
    In an article from December 7, 2011, The Washington Post 
reported that ``976 fragments from 274 military personnel from 
the Dover Air Force Base mortuary were cremated, incinerated 
and taken to the Prince George's landfill between 2004 and 
2008.'' Accordingly, this legislation aims to prevent what 
happened at Dover Air Force Base from recurring by creating a 
dignified resting place for certain remains of veterans that 
may otherwise not have a designated final resting place.
    Under Section 3, the design of the Place of Remembrance 
would be deferred to the Secretary of the Army, who would 
prescribe regulations as necessary to carry out the design, and 
otherwise determine the logistics of establishing and 
constructing the Place of Remembrance.
    Specifically, remains that would be authorized for 
interment at the Place of Remembrance include fragments of the 
remains of a deceased member of the Armed Forces (or fragments 
reasonably believed to be from the remains of a deceased member 
of the Armed Forces) that: (1) are unidentifiable by use of DNA 
testing or other means because of the condition of the 
fragments; (2) are unclaimed after a reasonable period of time; 
(3) are identified and authorized for interment in the Place of 
Remembrance by the person designated under section 1482(c) of 
title 10, United States Code, to direct disposition of the 
remains of the member; or (4) are designated as ``No Further 
Pursuit'' remains in cases in which the family of a deceased 
member has indicated to the Secretary of the Army that the 
family does not want to be consulted when fragments of the 
remains of the member are found.

 SECTION 4--FURNISHING CASKETS AND URNS FOR DECEASED VETERANS WITH NO 
                           KNOWN NEXT OF KIN

    Section 4 of H.R. 5948, as amended, is derived from H.R. 
6073. This bill was introduced in direct response to an 
incident at Bushnell National Cemetery where an indigent 
veteran with no next of kin was buried in a cardboard box. This 
section would prevent similar future occurrences of such an 
incident by requiring the Secretary to furnish an appropriate 
casket or urn for a deceased veteran with no known next of kin, 
where no other person claims the body, and the veteran lacks 
sufficient resources to cover burial and funeral expenses.

   SECTION 5--IMPROVED COMMUNICATION BETWEEN DEPARTMENT OF VETERANS 
          AFFAIRS AND MEDICAL EXAMINERS AND FUNERAL DIRECTORS

    Section 5 of H.R. 5948, as amended, is derived from H.R. 
6073. This bill was introduced in direct response to an 
incident at Bushnell National Cemetery where an indigent 
veteran with no next of kin was buried in a cardboard box. This 
section would require the Secretary, in the case of a deceased 
veteran with no known next of kin or person claiming the body, 
and when the veteran lacks sufficient resources to cover burial 
and funeral expenses, to ensure that any entity responsible for 
transporting the body of a deceased veteran to a national 
cemetery submits to VA whether the deceased veteran was 
cremated and steps taken to ensure the deceased veteran has no 
next of kin.

SECTION 6--REPORT ON COMPLIANCE OF DEPARTMENT OF VETERANS AFFAIRS WITH 
                INDUSTRY STANDARDS FOR CASKETS AND URNS

    Section 6 of H.R. 5948, as amended, is derived from H.R. 
6073. This bill was introduced in direct response to an 
incident at Bushnell National Cemetery where an indigent 
veteran with no next of kin was buried in a cardboard box. This 
section would require the Secretary to submit to both the House 
and Senate Committees on Veteran's Affairs a report within 180 
days of enactment of this legislation detailing VA's compliance 
with industry standards for caskets andand urns, including a 
description of the industry standards for caskets and urns and as 
assessment of compliance at the National Cemeteries administered by VA.

  SECTION 7--EXCLUSION OF PERSONS CONVICTED OF COMMITTING CERTAIN SEX 
  OFFENSES FROM INTERMENT OR MEMORIALIZATION IN NATIONAL CEMETERIES, 
ARLINGTON NATIONAL CEMETERY, AND CERTAIN STATE VETERANS' CEMETERIES AND 
                 FROM RECEIVING CERTAIN FUNERAL HONORS

    Section 7 of H.R. 5948, as amended, is derived from H.R. 
2355, and would bar convicted Tier III sex offenders under the 
Sex Offender Registration and Notification Act from burial in 
national veterans cemeteries and some state veterans 
cemeteries, if the offender is convicted of such an offense, 
that conviction is final, and the offender is sentenced to a 
minimum of life imprisonment.
    Current law prohibits individuals convicted of capital 
crimes, such as murder or treason, from burial in a national 
veterans' cemetery and some state veterans cemeteries. Although 
Congress has been reluctant to restrict the rights that 
veterans earned during service due to actions that took place 
after service, some crimes are of such a serious and heinous 
nature that compel revocation of those rights in an effort to 
preserve the honor and dignity of the service members who would 
be resting beside such offenders in a national veterans 
cemetery or state veterans cemetery. A sex offense meriting 
life in prison is an example of one such crime and Section 7 
would appropriately include it as a disqualifier of burial 
honors under Title 38.

          SECTION 8--VETERANS FREEDOM OF CONSCIENCE PROTECTION

    Section 8 of H.R. 5948, as amended, is derived from H.R. 
2720, and would ensure that, to the extent practicable, the 
express wishes of a veteran's family with regard to religious 
expressions are honored during interment or inurnment 
ceremonies at a VA national cemetery. This would include 
ensuring the availability, to the extent practicable, of 
cemetery grounds and appropriate facilities for the purposes of 
mourning and reflection, and allowing VSO honor guard access to 
the ceremony if requested by the family. In addition, any 
person aggrieved by a violation of this subsection would have 
the right to a private cause of action in an appropriate 
Federal Court.
    Section 8 is in direct response to an incident at the 
Houston National Cemetery in May 2011. At that time, cemetery 
officials were accused of banning use of religious speech 
during services at the ceremony. A lawsuit was brought before 
the U.S. District Court for the Southern District of Texas, 
Houston Division and a settlement decree was entered into. 
Although the settlement decree addressed the specific incidents 
at Houston National Cemetery, this legislation was brought to 
ensure that a similar incident does not take place at another 
VA national cemetery.

    SECTION 9--AUTHORITY FOR THE PERFORMANCE OF MEDICAL DISABILITY 
                  EXAMINATIONS BY CONTRACT PHYSICIANS

    Section 9 of H.R. 5948, as amended, is derived from H.R. 
5880, which would extend VA's authority to enter into contracts 
with private physicians to conduct medical disability 
examinations from December 31, 2012, to December 31, 2017.
    The need for this legislation was made clear at a hearing 
held on April 23, 2012, entitled ``Discovering a More Efficient 
Process: Improving Timeliness and Adequacy of VA Compensation 
and Pension Examinations.'' Witnesses at that hearing 
unanimously testified that contract examinations are an 
integral part of the C&P examination process and that VA would 
be severely disadvantaged if the authority to use this type of 
examination was allowed to expire.
    In addition, VA specifically requested this extension in 
its Fiscal Year 2013 budget submission, stating:

          This proposal would extend by five years a provision 
        of P.L. 108-183, section 704, for the authority to use 
        discretionary VBA funding to procure contracted 
        disability examinations to supplement the examinations 
        provided by VHA and procured at 10 VBA regional offices 
        through contracts reimbursed from mandatory 
        Compensation and Pensions account under the authority 
        of P.L. 104-275, section 504. The sunset date provided 
        in section 704 was most recently extended to December 
        31, 2012, by P.L. 111-275, section 809. The requested 
        extension would be advantageous to planning and 
        executing appropriate contracts for future examinations 
        in the most needed regions of the country. (U.S. 
        Department of Veterans Affairs Fiscal Year 2013 Budget 
        Submission, Vol. 3, pg. 2A-24.)

      SECTION 10--PROVISION OF ACCESS TO CASE-TRACKING INFORMATION

    Section 10 of H.R. 5948, as amended, is derived from H.R. 
5881, which would allow county veterans service officers and 
some Congressional employees access to read-only information 
regarding the status of pending claims. Privacy concerns would 
be addressed through a certification step each time information 
is accessed, and through required VA privacy certification 
training.
    The need for this legislation was made clear during a round 
table discussion on May 14, 2012, between Committee staff and 
various County Veteran Service Officers (CVSOs), to discuss 
issues that affect them while trying to assist veterans. One of 
the main issues discussed was lack of access to claims file 
information, which impeded CVSOs ability to answer veterans' 
questions about their claims. Although many veterans use a 
nationally chartered veteran service organization (VSO) as 
their Power of Attorney (POA) during the claims process, this 
contact is often unable to timely respond to veterans' status 
requests due to workload constraints. Therefore, this 
legislation aims to provide such access, which should assist in 
preventing veterans from filing duplicate claims and 
overburdening VA's 1-800 telephone number.

   SECTION 11--NOTIFICATION BY THE SECRETARY OF VETERANS AFFAIRS OF 
INDIVIDUALS WHOSE SENSITIVE PERSONAL INFORMATION IS INVOLVED IN A DATA 
                                 BREACH

    Section 11 of H.R. 5948, as amended, is based on language 
in H.R. 3730, and is intended to provide better protections to 
veterans whose sensitive information has been compromised by 
VA.
    Currently, a veteran may not learn of his or her personally 
identifiable information (PII) having been compromised by VA 
until 30 to 60 days after such a compromise has taken place. 
The problem with the length of delay between a breach having 
occurred, VA learning of the breach, and a veteran learning of 
a breach involving his or her PII is that the damage done in 
the areas of identity theft and credit ratings using that 
compromised information could take years to repair.
    In discussions with Committee staff, VA indicated that it 
could reduce the notification time period without difficulty to 
a period of 10 business days. By reducing this period of time, 
a veteran has a much greater chance of being able to take 
action to protect his or her identity and avoid a lengthy fight 
in correcting harmful and unknown actions by an identity thief.
    Section 11 of H.R. 5948, as amended, would require the 
Secretary, in the event of a data breach involving PII, to 
notify Congress and all individuals whose information is 
compromised within 10 days of the Secretary becoming aware a 
breach has occurred, or within 15 days if meeting the 10 day 
timeframe is not feasible. Section 11 of H.R. 5948, as amended, 
would further require the Secretary to provide all individuals 
affected by the data breach with a description of the sensitive 
personal information compromised and information regarding 
steps they can take to protect their information from 
unauthorized use, and to notify the general public through the 
Office of Public Affairs by not later than 10 days after the 
date on which the Secretary learns of the breach.

 SECTION 12--LIMITATION ON BONUSES FOR DEPARTMENT OF VETERANS AFFAIRS 
        EMPLOYEES WHO VIOLATE FEDERAL CIVIL LAWS OR REGULATIONS

    Section 12 of H.R. 5948, as amended, is based on H.R. 4481, 
as amended.
    Federal Acquisition Regulations (FAR) and their VA 
counterpart, VA Acquisition Regulations (VAAR), are codified in 
chapter 13 of title 41, United States Code, and chapter 8 of 
title 48, United States Code of Federal Regulations. As such, 
violations of these regulations are violations of U.S. law. 
During questioning at a February 2012 hearing regarding illegal 
purchases made by VA employees through the Department's 
Pharmaceutical Prime Vendor (PPV), the Department conceded that 
it did not know of any penalties that may be instituted for 
violations of FAR by its employees, nor had it pursued any 
actions against personnel that had violated FAR. At no time 
prior to questioning at this hearing did VA note that the 
actions of its employees were illegal despite that fact being 
relatively clear.
    The violations of FAR and VAAR referenced during the 
February 2012 PPV hearing were unauthorized commitments of the 
federal government by VA purchasing agents. In summary, VA 
purchasers had exceeded their purchasing authority over many 
years and illegally indebted the federal government for 
hundreds of millions of dollars. Due to VA's inability and 
unwillingness to fully track and account for all of the past 
purchases, a final dollar amount for the illegal purchases will 
most likely never be determined.
    Even if VA continues to ignore the unauthorized commitments 
by its employees and takes no action to recoup the funds from 
the purchasers, the Department still has its own table of 
penalties for addressing these violations. However, no 
employees had been held accountable prior to the February 2012 
PPV hearing, and by the time a follow-up PPV hearing was held 
in June 2012, very few employees had received any disciplinary 
action based on provisions within FAR and VAAR or VA's table of 
penalties.
    Given VA's lack of oversight over its own purchasers, as 
well as a documented lack of oversight over its awarding of 
bonuses and incentives, this provision will ensure that VA 
employees will not be awarded for failing to comply with 
Federal laws and regulations, including the FAR and VAAR, even 
if these failures are not subject to disciplinary action. This 
commonsense approach to stewardship of taxpayer dollars will 
rein in the haphazard process of awarding bonuses and 
incentives that has been prevalent within VA.

   SECTION 13--LIMITATION ON AWARDS AND BONUSES TO EMPLOYEES OF THE 
                     DEPARTMENT OF VETERANS AFFAIRS

    VA currently disburses an annual average of approximately 
$400,000,000 in bonuses, awards, and other incentives. These 
incentives include Group Cash Awards, Travel Savings 
Incentives, Individual Cash Awards (Not Rating Based), 
Presidential Rank Awards, SES Performance Awards, Individual 
Cash Awards (Rating Based), Individual Suggestion/Invention 
Awards, Group Suggestion/Invention Awards, Foreign Language 
Awards, Group Awards--Other, Specialty Certification Awards, 
Exemplary Job Performance/Achievement Awards, Lump Sum 
Performance Payments (Rating Based-In Lieu of Pay Adjustment), 
Lump Sum Performance Payments (Rating Based Not in Lieu of Pay 
Adjustment), Lump Sum Performance Payments (Not Rating Based), 
Retention Incentives, Recruitment Incentives, and Relocation 
Incentives. In addition, VA also awards Individual Time Off 
Awards--Hours and Group Time Off Awards--Hours that are not 
readily quantified into dollar amounts.
    The Office of Personnel Management (OPM) issues a guide to 
federal agencies for processing these awards, many of which are 
covered under title 5, United States Code. Further policy for 
awarding bonuses and other incentives is established by VA's 
Office of Human Resources Management. This policy is then 
executed at multiple levels throughout VA all the way down to 
facility directors.
    In a November 14, 2011, report titled ``Audit of Retention 
Incentives for Veterans Health Administration and VA Central 
Office Employees,'' (VAOIG 10-02887-30) VA's Office of 
Inspector General (VAOIG) identified that approving officials 
within both the Department of Veterans Affairs Central Office 
(VACO) and the Veterans Health Administration (VHA) did not 
adequately justify retention incentive awards. In the awards 
reviewed, VAOIG also consistently identified missing support 
documentation to accompany the award.
    The VAOIG's findings were consistent with the Committee's 
findings of bonuses being awarded to employees with less than 
satisfactory performance evaluations and retention incentives 
being awarded to employees who had stated their intention to 
retire in the very near future.
    Based on numbers provided by VA, the limit on bonuses 
contained in Section 13 of H.R. 5948, as amended, is 90% of the 
three-year average on bonuses paid of $397,348,032.90. This 
modest reduction, that does not include additional time off 
awards, leaves sufficient funding for VA to award suitable 
bonuses and other incentives to deserving employees.

         SECTION 14--SENSE OF CONGRESS ON PATRIOT GUARD RIDERS

    Section 14 of H.R. 5948, as amended, is derived from H. 
Res. 669. The Patriot Guard Riders have over 220,000 members 
nationwide and, by invitation of the family, participate in the 
funerals of armed service members killed in action. Their 
participation includes shielding the family from protestors and 
other disturbing interruptions.
    This section would commend the Patriot Guard Riders and all 
of the other volunteers involved in shielding the mourning 
family and friends of a fallen member of the Armed Forces from 
interruptions created by any protestor or group of protestors; 
and would recognize the sacrifices that veterans, members of 
the Armed Forces, and their families have made, and continue to 
make, on behalf of the United States.

       SECTION 15--SENSE OF CONGRESS HONORING KOREAN WAR VETERAN

    Section 15 of H.R. 5948, as amended, is derived from H. 
Res. 618. The 60th anniversary of the Korean cease-fire 
agreement occurs in July 2013. This section recognizes the 
importance of the contributions and sacrifices made by Korean 
War veterans.

                                Hearings

    On June 6, 2012, the Subcommittee on Disability Assistance 
and Memorial Affairs conducted a legislative hearing on various 
bills introduced during the 112th Congress, including H.R. 
5735, H.R. 2355, H.R. 2720, H.R. 5880, and H.R. 5881. The 
following witnesses testified: The Honorable Steve Stivers, 
U.S. House of Representatives; The Honorable Vicky Hartzler, 
U.S. House of Representatives; The Honorable Larry Kissell, 
U.S. House of Representatives; The Honorable John Culberson, 
U.S. House of Representatives; Mr. Raymond Kelley, National 
Legislative Director, Veterans of Foreign Wars; Mr. James 
Young, President, National Association of County Veterans' 
Service Officers; Mr. Jeff Hall, Assistant National Legislative 
Director, Disabled American Veterans; Ms. Debbie Lee, Founder, 
America's Mighty Warriors; Ms. Lisa Ward, Widow to Major 
Richard Ward, U.S. Army, Persian Gulf War; Mr. Kelly 
Shackelford, President, The Liberty Institute; Jay Sanders, 
Senior Vice Commander, Veterans of Foreign Wars, District 4; 
Ms. Kathryn Condon, Executive Director, Army National 
Cemeteries Program; and Mr. Thomas Murphy, Director of 
Compensation and Pension Service, U.S. Department of Veterans 
Affairs, who was accompanied by Mr. Richard Hippolit, Office of 
the General Counsel, U.S. Department of Veterans Affairs.
    A Statement for the Record was submitted by The Honorable 
Ted Poe, U.S. House of Representatives.
    On June 20, 2012, the Subcommittee on Oversight and 
Investigations conducted a legislative hearing on various bill 
introduced during the 112th Congress including H.R. 2985, H.R. 
3730, H.R. 4481, and H.R. 5948. The following witnesses 
testified: The Honorable Todd Akin, U.S. House of 
Representatives; Mr. Dave McLenachen, Director of Pension and 
Fiduciary Service, U.S. Department of Veterans Affairs; Mr. 
Ralph Ibson, National Policy Director, Wounded Warrior Project; 
Ms. Lauren Kologe, Deputy Director of Veterans Benefits 
Program, Vietnam Veterans of America; Ms. Heather Ansley, Vice 
President of Veterans Policy, VetsFirst; and Ms. Lori Perkio, 
Assistant Director, Veterans Affairs and Rehabilitation 
Commission, The American Legion.

                       Subcommittee Consideration

    On June 27, 2012, the Subcommittee on Disability Assistance 
and Memorial Affairs met in an open markup session, a quorum 
being present, and favorably forwarded to the full Committee 
H.R. 5735, as amended, H.R. 5880 and H.R. 5881, by voice vote.
    During consideration of H.R. 5735 the following amendment 
was considered and agreed to by voice vote:
    An amendment in the nature of a substitute incorporating 
provisions from H.R. 2355 and H.R. 2720.
    On June 27, 2012, the Subcommittee on Oversight and 
Investigations met in an open markup session, a quorum being 
present, and favorably forwarded to the full Committee H.R. 
3730, as amended, H.R. 4481, as amended, and H.R. 5948, as 
amended, by voice vote.
    During consideration of H.R. 3730 the following amendment 
was considered and agreed to by voice vote:
    An amendment by Mr. Donnelly of Indiana to change when 
notifications were required.
    During consideration of H.R. 4481 the following amendment 
was considered and agreed to by voice vote:
    An amendment in the nature of a substitute offered by Mr. 
Roe of Tennessee.
    During consideration of H.R. 5948 the following amendment 
was considered and agreed to by voice vote:
    An amendment in the nature of a substitute offered by Mr. 
Johnson of Ohio.

                        Committee Consideration

    On July 11, 2012, the full Committee met in an open markup 
session, a quorum being present, and ordered H.R. 5948, as 
amended, reported favorably to the House of Representatives by 
voice vote. During consideration of the bill, the following 
amendment was considered:
    An amendment in the nature of a substitute, by Mr. Johnson 
of Ohio, which contained provisions affecting veteran burial 
benefits, health benefits, restricting bonus payments by VA, 
commending the Patriot Guard Riders, and recognizing Korean War 
veterans was agreed to by voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the recorded 
votes on the motion to report the legislation and amendments 
thereto. There were no recorded votes taken on amendments or in 
connection with ordering H.R. 5948, as amended, reported to the 
House. A motion by Ranking Member Bob Filner of California to 
order H.R. 5948, as amended, reported favorably to the House of 
Representatives was agreed to by voice vote.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives are reflected in the descriptive portions 
of this report.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                  Earmarks and Tax and Tariff Benefits

    H.R. 5948, as amended, does not contain any congressional 
earmarks, limited tax benefits, or limited tariff benefits as 
defined in clause 9 of rule XXI of the Rules of the House of 
Representatives.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate on H.R. 
5948, as amended, prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

               Congressional Budget Office Cost Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
for H.R. 5948, as amended, provided by the Congressional Budget 
Office pursuant to section 402 of the Congressional Budget Act 
of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 18, 2012.
Hon. Jeff Miller,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5948, a bill to 
amend title 38, United States Code, to improve the supervision 
of fiduciaries of veterans under the laws administered by the 
Secretary of Veterans Affairs, and for other purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Dwayne M. 
Wright.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 5948--A bill to amend title 38, United States Code, to improve the 
        supervision of fiduciaries of veterans under laws administered 
        by the Secretary of Veterans Affairs, and for other purposes

    Summary: H.R. 5948 would make changes to certain 
administrative procedures and programs of the Department of 
Veterans Affairs (VA), including the fiduciary program, limits 
on bonuses for employees, and medical disability examinations 
by contract physicians. CBO estimates that implementing H.R. 
5948 would have a discretionary cost of $53 million over the 
2013-2017 period, assuming appropriation of the necessary 
amounts. Also, CBO estimates that enacting H.R. 5948 would 
increase direct spending by $1 million over the 2013-2017 
period, for burial programs.
    Pay-as-you-go procedures apply because enacting this 
legislation would affect direct spending. Enacting H.R. 5948 
would not affect revenues.
    H.R. 5948 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 5948 is shown in the following table. 
The costs of this legislation fall within budget function 700 
(veterans benefits and services).

----------------------------------------------------------------------------------------------------------------
                                                                 By fiscal year, in millions of dollars--
                                                         -------------------------------------------------------
                                                            2013     2014     2015     2016     2017   2013-2017
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Limit on Awards and Bonuses to VA Employees:
    Estimated Authorization Level.......................      -53      -57      -61      -65      -69      -305
    Estimated Outlays...................................      -53      -57      -61      -65      -69      -305
Improvement of Fiduciary Program for Veterans:
    Estimated Authorization Level.......................       37       38       38       39       40       192
    Estimated Outlays...................................       37       38       38       39       40       192
Disability Examinations by Contract Physicians:
    Estimated Authorization Level.......................       22       29       29       29       29       138
    Estimated Outlays...................................       22       29       29       29       29       138
Provision of Access to Case-Tracking System:
    Estimated Authorization Level.......................        6        5        5        5        5        26
    Estimated Outlays...................................        6        5        5        5        5        26
Establishment of Place of Remembrance at Arlington
 National Cemetery:
    Estimated Authorization Level.......................        *        *        *        *        *         1
    Estimated Outlays...................................        *        *        *        *        *         1
Other Provisions:
    Estimated Authorization Level.......................        *        *        *        *        *         1
    Estimated Outlays...................................        *        *        *        *        *         1
    Total Changes:
        Estimated Authorization Level...................       12       15       11        8        5        53
        Estimated Outlays...............................       12       15       11        8        5       53
----------------------------------------------------------------------------------------------------------------
Notes: In addition to the changes in spending subject to appropriation shown above, CBO estimates that enacting
  H.R. 5948 would increase direct spending by $1 million over the 2013-2022 period.
Columns may not sum to totals because of rounding.
VA = Department of Veterans Affairs; * = less than $500,000.

    Basis of estimate: For this estimate, CBO assumes 
appropriation actions consistent with the bill, that the 
legislation will be enacted near the start of fiscal year 2013, 
and that outlays will follow historical patterns for similar 
and existing programs.

Spending subject to appropriation

    CBO estimates that implementing H.R. 5948 would cost $53 
million over the 2013-2017 period, assuming appropriation of 
the estimated amounts.
    Limit on Awards and Bonuses to VA Employees. Section 13 
would limit the amount that VA could pay in awards and bonuses 
to VA employees to about $358 million per year over the 2013-
2017 period. In 2011, VA paid about $410 million in awards and 
bonus payments to employees. Assuming such payments will 
continue at that level, and accounting for anticipated 
inflation, CBO estimates that implementing section 13 would 
reduce discretionary spending for pay and performance by $305 
million over the 2013-2017 period, assuming appropriation 
actions consistent with the bill.
    Improvement of Fiduciary Program for Veterans. Section 2 
would make significant changes to VA's fiduciary program. The 
provision would require VA to:
        
 Determine the competency of individuals 
        appointed as fiduciaries;
        
 Remove certain fiduciaries deemed incompetent 
        and review the files of fiduciaries appealing such 
        decisions;
        
 Maintain a list of state, local, or nonprofit 
        agencies that could perform fiduciary duties;
        
 Update the qualifications and procedures for 
        becoming a fiduciary to include: visits to proposed 
        fiduciaries, internet training, and criminal background 
        and credit checks;
        
 Require that all fiduciaries provide 
        accounting details for VA verification; and
        
 Notify veterans of court-ordered fiduciaries 
        and if a requested fiduciary is unqualified and why.
    Section 2 also would require VA to maintain a database of 
all fiduciaries and submit a report to the Congress on the 
progress of the program.
    Based on information from VA, CBO estimates that about 460 
additional employees would need to be hired to accommodate the 
requirements of section 2 at an average annual cost of about 
$80,000 per employee. We also estimate that the information 
technology systems necessary to maintain the database would 
cost about $1 million per year. Therefore, CBO estimates that 
implementing section 2 would cost $192 million over the 2013-
2017 period, assuming appropriation of the necessary amounts.
    Disability Examinations by Contract Physicians. Section 9 
would extend the authority for VA to use contract physicians to 
perform medical disability examinations through December 31, 
2017. Under current law, that authority expires on December 31, 
2012. Based on information from VA, CBO estimates that, in 
2011, VA used the current authority to have about 36,000 exams 
completed by contract physicians at a cost of about $800 per 
exam and expects to complete the same amount each year over the 
2013-2017 period.
    In the absence of such authority, VA physicians who would 
otherwise be providing other types of health care to veterans 
will perform the exams, at no additional cost to VA. Thus, CBO 
estimates that implementing section 9 would cost $138 million 
over the 2013-2017 period, assuming appropriation of the 
necessary amounts.
    Provision of Access to Case-Tracking System. Section 10 
would require VA to provide certain individuals, referred to as 
covered employees, access to VA's case-tracking system in order 
to provide veterans with information regarding the status of 
claims submitted to VA. A covered employee under section 10 
would include Members of the Congress and their staff and 
certain employees of state or local agencies who assist 
veterans with claims for benefits.
    This access would be limited so that no covered employee 
would be able to alter any information in the system or have 
access to any medical records. Also, all covered employees 
would be required to complete a certification course on privacy 
issues that would be provided by VA.
    CBO expects that about 8,000 Congressional, state, and 
local employees would take training courses and be granted 
access at a cost of about $600 per employee. VA also would need 
to modify their system to ensure limited access. Therefore, CBO 
estimates that implementing section 10 would increase 
discretionary costs for information technology by $26 million 
over the 2013-2017 period, assuming appropriation of the 
necessary amounts.
    Establishment of Place of Remembrance at Arlington National 
Cemetery (ANC). Section 3 would authorize the Army to establish 
a Place of Remembrance in ANC for the interment of fragmentary 
remains of members of the Armed Forces who die or have died in 
any war or contingency operation or in the line of duty and are 
unidentifiable or unclaimed. CBO estimates that implementing 
section 3 would cost $1 million over the 2013-2017 period, 
assuming the availability of appropriated funds.
    Other Provisions. Implementing the following provisions 
would increase discretionary spending by a total of $1 million 
over the 2013-2017 period:
    
 Section 6 would require VA to communicate with a 
funeral home when a deceased veteran has been transferred to VA 
and determined to have no next of kin to ensure that the 
funeral home has also taken measures to locate family members.
    
 Section 6 would require a report on VA's 
compliance with industry standards for caskets and urns.
    
 Section 7 would require VA to determine if a 
veteran who dies in prison is a Tier III sex offender, and 
therefore excluded from burial honors or burial in a VA 
national cemetery, Arlington National Cemetery, or state 
veterans' cemeteries.
    
 Section 8 would require VA to notify the next of 
kin or agent of each deceased individual eligible for burial in 
a national cemetery of any funeral honors available, including 
honors provided by the military or volunteer veterans honor 
guard.
    
 Section 11 would require VA to provide notice to 
the Congress, affected individuals, and the general public 
whenever sensitive personal information maintained by VA is 
breached. Such notification would be provided by email or in 
writing and should explain the nature of the breach, 
information about free credit protection services, and phone 
numbers where the individual can receive information on 
identity theft.

Direct spending

    Section 4 would require VA to provide a quality casket or 
urn for deceased veterans with no known next of kin, in those 
cases where they are transferred to VA in a substandard 
container. Based on information from VA on the number of 
veterans who die per year with no known next of kin and who are 
transferred to VA in substandard containers from funeral homes 
or other entities responsible for deceased individuals, CBO 
expects VA would be required to provide less than 100 caskets 
or urns per year for deceased veterans. CBO estimates that the 
required caskets or urns would have an average cost of about 
$1,000 each, and thus that section 4 would increase direct 
spending by $1 million over the 2013-2022 period.
    Intergovernmental and private-sector impact: H.R. 5948 
contains no intergovernmental or private-sector mandates as 
defined in UMRA. Local governments might incur some costs as a 
result of new requirements included in the bill, but those 
costs would result from participation in a voluntary federal 
program.
    Estimate prepared by: Federal costs: Dwayne M. Wright; 
Impact on State, Local, and Tribal Governments: Lisa Ramirez-
Branum; Impact on the Private Sector: Elizabeth Bass.
    Estimate approved by: Peter H. Fontaine, Assistant Director 
for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates regarding H.R. 5948, as amended, prepared by the 
Director of the Congressional Budget Office pursuant to section 
423 of the Unfunded Mandates Reform Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act would be created by H.R. 
5948, as amended.

                 Statement of Constitutional Authority

    Pursuant to Article I, section 8 of the United States 
Constitution, the reported bill is authorized by Congress' 
power to ``provide for the common Defense and general Welfare 
of the United States.''

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 2--Improvement of fiduciaries for veterans

    Section 2(a) would amend section 5502 of chapter 55 of 
title 38, United State Code, to revise the process for 
appointment of fiduciaries. Section 2(a) would require VA to 
provide a written statement to the veteran detailing the 
reasons for the appointment of a fiduciary and implement an 
appeals process which would allow a veteran to challenge the 
finding of mental incompetence. This part would also allow a 
veteran to predesignate a fiduciary, request the modification 
of an appointed fiduciary, and establish that a fiduciary 
operates independently of VA to act in the best interest of the 
beneficiary.
    Section 2(b) would amend section 5502 of chapter 55 of 
title 38, United States Code, to decrease the commission 
appointed fiduciaries may receive to the lesser of 3% of 
monthly benefits or $35. It would also allow VA attorneys to 
appear in a court of appropriate jurisdiction against any 
fiduciary who has failed to execute the duties of a VA 
appointed fiduciary. Section 2(b) would permit VA to 
temporarily make payments to the person or institution having 
custody and control of an incompetent or minor beneficiary. 
Upon the death of a beneficiary, section 2(b) would direct 
fiduciaries to pay all remaining funds overseen by fiduciaries 
to any surviving spouse, or in equal parts to any children, or 
in equal parts to any dependent parents. It would also require 
that if a beneficiary did not have a spouse, children, or 
dependent parents and lived in a state where the beneficiary's 
assets would then escheat to the state, any funds derived from 
VA benefits would then escheat to the United States.
    Section 2(c) would amend section 5506 of chapter 55 of 
title 38, United States Code, to require VA to expand the 
definition of a person eligible to serve as a fiduciary to 
include state and local government agencies and nonprofits, and 
compel VA to maintain a list of state or local agencies and 
nonprofit social agencies who qualify to act as a fiduciary.
    Section 2(d) would amend section 5507 of chapter 55 of 
title 38, United States Code, to mandate that VA investigate 
each fiduciary before appointment and allow VA to expedite the 
investigation for certain proposed fiduciaries. The 
investigation would include a face-to-face interview no more 
than 30 days after the investigation begins and a background 
check which would include a criminal background check and a 
credit check. The background check would be performed each time 
a person is proposed as a fiduciary. It would also require VA 
to notify the beneficiary if a fiduciary is convicted of 
certain crimes. This part would also require VA to maintain 
records of any person who previously served as a fiduciary and 
any fiduciary whose status was revoked and would require each 
regional office to maintain a list with the name and contact 
information of each fiduciary and include pertinent information 
related to each fiduciary's background investigation, bond 
payment, and the amount the fiduciary controls for each 
beneficiary served.
    Section 2(d) would also require VA to investigate alleged 
misuse of benefits, and, if substantiated, to transmit the 
results of the investigation to the Attorney General and each 
head of a federal department or agency that pays benefits to 
fiduciaries or beneficiaries. It would also require VA to 
ensure that any bond furnished by a fiduciary was not paid 
using funds from the beneficiary and to consider the care a 
proposed fiduciary has taken to protect the interests of the 
beneficiary while also considering the capacity of the proposed 
fiduciary to meet the financial requirements of the bond.
    Section 2(e) would amend section 5509 of chapter 55 of 
title 38, United States Code, to require fiduciaries to file an 
annual report to include the amount of benefits the beneficiary 
accrued during the year, if the fiduciary serves the 
beneficiary for non-VA benefits, an accounting of all other 
sources of income the fiduciary oversees for the beneficiary, 
and whether the fiduciary was convicted of any crime, filed 
bankruptcy, and any judgments entered against the fiduciary. It 
would require VA to perform random audits of fiduciaries who 
receive a commission. Section 2(e) would also require the Under 
Secretary of Benefits and the Under Secretary for Health to 
promulgate regulations that would not diminish the ability of 
fiduciaries providing care under chapter 17, title 38, United 
States Code, to care for beneficiaries.
    Section 2(f) would amend section 5509 of chapter 55 of 
title 38, United States Code, to require VA to provide the 
Committee on Veterans' Affairs of the Senate and the Committee 
on Veterans' Affairs of the House of Representatives a report 
on the implementation of the new policies and procedures 
outlined in section 2 and a discussion on whether VA should 
offer fiduciaries standardized financial software to comply 
with reporting requirements.

Section 3--Establishment of Place of Remembrance at Arlington National 
        Cemetery

    Section 3 would add a new section, 4727, to chapter 446 of 
title 10, United States Code, to direct the Secretary of the 
Army to establish a Place of Remembrance at an appropriate 
location in Arlington National Cemetery for the interment of 
cremated remains of certain deceased members of the Armed 
Forces. It also directs that the regulations governing the 
construction and placement of the Place of Remembrance be 
prescribed by the Secretary of Defense.

Section 4--Furnishing caskets and urns for deceased veterans with no 
        known next of kin

    Section 4 would amend section 2306 of chapter 23 of title 
38, United States Code, by providing that the Secretary of VA 
shall provide a casket or urn of such quality that the 
Secretary considers appropriate for a dignified burial in a 
national cemetery to deceased veterans with no known next of 
kin.

Section 5--Improved communication between Department of Veterans 
        Affairs and medical examiners and funeral directors

    Section 5 would add a new section, 2414, to chapter 24 of 
title 38, United States Code, to ensure that local medical 
examiners, funeral directors, or other entity responsible for 
the body of a deceased veteran communicate certain information 
to the Secretary of VA, including whether the veteran was 
cremated and any steps taken to ensure that the deceased 
veteran has no next of kin. This section also describes a 
deceased veteran for purposes of this section as one who has no 
next of kin or other person claiming the body of the deceased 
veteran and does not have sufficient resources to cover burial 
and funeral expenses.

Section 6--Report on compliance of Department of Veterans Affairs with 
        industry standards for caskets and urns

    Section 6 directs the Secretary of VA to submit, not later 
than 180 days after the enactment of this Act, a report to the 
House and Senate Committees on Veterans' Affairs discussing the 
industry standard for caskets and urns and assessment of the 
National Cemetery Administration's compliance with such 
standards.

Section 7--Exclusion of persons convicted of committing certain sex 
        offenses from interment or memorialization in national 
        cemeteries, Arlington National Cemetery, and certain State 
        veterans' cemeteries and from receiving certain funeral honors

    Section 7 amends section 2411(b) of chapter 24 of title 38, 
United States Code, by prohibiting those who have been 
convicted of certain tier III sex offenses and sentenced to a 
minimum of life imprisonment from burial in a VA national 
cemetery, Arlington National Cemetery, and certain state 
veterans' cemeteries as well as from receiving certain funeral 
honors.

Section 8--Veterans freedom of conscience protection

    Section 8 amends section 2404 of chapter 24 of title 38, 
United States Code, by adding that the Secretary of VA shall, 
to the extent practicable, honor the wishes of the next of kin 
or other agent of a deceased veteran at a funeral, memorial 
service or ceremony, to include using public areas of the 
cemetery for prayer, mourning or reflection; display of any 
religious or other symbols chosen by the family; and the use of 
any military or volunteer honor guard. In addition, the section 
provides that anyone who is aggrieved by a violation of this 
section may bring a civil action in an appropriate federal 
court.

Section 9--Authority for the performance of medical disability 
        examinations by contract physicians

    Section 9 would amend section 5101 of subchapter I of 
chapter 51 of title 38, United States Code, by extending the 
authority for the performance or medical disability 
examinations by contract physicians from December 31, 2012, to 
December 31, 2017.

Section 10--Provision of access to case-tracking information

    Section 10 adds a new section, 5906, to chapter 59 of title 
38, United States Code, to provide certain employees, such as 
county veteran service officers and Congressional caseworkers, 
with access to case-tracking information at VBA. The covered 
employee must complete a required privacy certification course 
and must certify that the access is for official purposes only. 
The covered employee would not have access to certain private 
records such as medical records and will not be able to modify 
data in the system.

Section 11--Notification by the Secretary of Veterans Affairs of 
        individuals whose sensitive personal information is involved in 
        a data breach

    Section 11 would amend subchapter III of chapter 57 of 
title 38, United States Code, to mandate VA to notify Congress 
and affected individuals when sensitive data has been breached. 
It would require VA to inform Congress and all individuals 
whose PII was compromised within 10 days of the Secretary 
becoming aware a breach has occurred or 15 days if the 10 day 
timeframe is not possible. It would also mandate VA to notify 
the general public within 10 days of the Secretary learning of 
the breach. It would also compel VA to notify individuals of a 
description of what PII was compromised and provide information 
on the steps they can take to protect their information.

Section 12--Limitation on bonuses for Department of Veterans Affairs 
        employees who violate Federal civil laws or regulations

    Section 12 would amend chapter 7 of title 38, United States 
Code, to deny bonuses to any employee of the Department who 
knowingly violates any law, regulation, or policy, including 
Federal Acquisition Regulations and Veterans Affairs 
Acquisition Regulations. Section 12 defines bonuses as (1) a 
retention incentive, (2) a retention incentive payment, (3) a 
retention incentive award, and (4) any other incentive 
requiring approval from the Central Office Human Resource 
Service, the Chief Business Office Workforce Management, or the 
Corporate Senior Executive Management Office. It would also 
require the Secretary to certify annually to the Congress that 
each bonus awarded was in accordance to this section.

Section 13--Limitation on awards and bonuses to employees of the 
        Department of Veterans Affairs

    Section 13 would require VA to limit the amount paid in 
performance awards or bonuses to $357,613,229.

Section 14--Sense of Congress on Patriot Guard Riders

    This section is a sense of Congress that commends the 
Patriot Guard riders for their volunteer efforts in shielding 
the mourning family and friends of fallen members of the Armed 
Forces from any protest groups, and recognizes the sacrifices 
that veterans, members of the Armed Forces, and their families 
have made on behalf of the United States.

Section 15--Sense of Congress honoring Korean War Veterans

    This section is a sense of Congress that, on the occasion 
of the 60th anniversary of the Korean War, Congress recognizes 
the importance and sacrifices made by veterans of the Korean 
War.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                      TITLE 38, UNITED STATES CODE




           *       *       *       *       *       *       *
PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


                          CHAPTER 7--EMPLOYEES

Sec.
701. Placement of employees in military installations.
     * * * * * * *
713. Limitation on bonuses.

           *       *       *       *       *       *       *


Sec. 713. Limitation on bonuses

  (a) In General.--(1) The Secretary shall ensure that no 
employee of the Department who, during any year, knowingly 
violates any law, regulation, or policy described in paragraph 
(2) receives a bonus for or during that year.
  (2) A law, regulation, or policy described in this paragraph 
is any of the following:
          (A) A Federal civil law or Federal regulation, 
        including such civil laws or regulations covered under 
        the Federal Acquisition Regulation and the Veterans 
        Affairs Acquisition Regulation.
          (B) An internal policy of the Department.
  (b) Certification.--The Secretary shall annually certify to 
Congress that each bonus awarded by the Secretary during the 
previous year was awarded in accordance with subsection (a)(1).
  (c) Bonus Defined.--For purposes of this section, the term 
``bonus'' includes--
          (1) a retention incentive;
          (2) a retention incentive payment;
          (3) a retention incentive award; and
          (4) any other incentive requiring approval from the 
        Central Office Human Resource Service, the Chief 
        Business Office Workforce Management, or the Corporate 
        Senior Executive Management Office.

           *       *       *       *       *       *       *


PART II--GENERAL BENEFITS

           *       *       *       *       *       *       *


CHAPTER 23--BURIAL BENEFITS

           *       *       *       *       *       *       *


Sec. 2306. Headstones, markers, and burial receptacles

  (a) * * *

           *       *       *       *       *       *       *

  (f) The Secretary shall furnish a casket or urn, of such 
quality as the Secretary considers appropriate for a dignified 
burial, for burial in a national cemetery of a deceased veteran 
described in section 2414(b) of this title.
  [(f)] (g)(1) * * *

           *       *       *       *       *       *       *

  [(g)] (h)(1) * * *

           *       *       *       *       *       *       *

  (4) A casket or urn may not be furnished under subsection (f) 
for burial of a person described in section 2411(b) of this 
title.

           *       *       *       *       *       *       *


             CHAPTER 24--NATIONAL CEMETERIES AND MEMORIALS

Sec.
2400. Establishment of National Cemetery Administration; composition of 
          Administration.
     * * * * * * *
2414. Communication between Department of Veterans Affairs and medical 
          examiners and funeral directors.

           *       *       *       *       *       *       *


Sec. 2404. Administration

  (a) * * *

           *       *       *       *       *       *       *

  (h)(1) With respect to the interment or funeral, memorial 
service, or ceremony of a deceased individual at a national 
cemetery, the Secretary shall ensure that--
          (A) the expressed wishes of the next of kin or other 
        agent of the deceased individual are respected and 
        given appropriate deference when evaluating whether the 
        proposed interment or funeral, memorial service, or 
        ceremony affects the safety and security of the 
        national cemetery and visitors to the cemetery;
          (B) to the extent possible, all appropriate public 
        areas of the cemetery, including committal shelters, 
        chapels, and benches, may be used by the family of the 
        deceased individual for contemplation, prayer, 
        mourning, or reflection; and
          (C) during such interment or funeral, memorial 
        service, or ceremony, the family of the deceased 
        individual may display any religious or other symbols 
        chosen by the family.
  (2) Subject to regulations prescribed by the Secretary under 
paragraph (5), including such regulations ensuring the security 
of a national cemetery, the Secretary shall provide to any 
military or volunteer veterans honor guard, including such 
guards belonging to a veterans service organization or other 
non-governmental group that provides services to veterans, 
access to public areas of a national cemetery if such access is 
requested by the next of kin or other agent of a deceased 
individual whose interment or funeral, memorial service, or 
ceremony is being held in such cemetery.
  (3) With respect to the interment or funeral, memorial 
service, or ceremony of a deceased individual at a national 
cemetery, the Secretary shall notify the next of kin or other 
agent of the deceased individual of funeral honors available to 
the deceased veteran, including such honors provided by any 
military or volunteer veterans honor guard described in 
paragraph (2).
  (4) Any person aggrieved by a violation of this subsection or 
any regulation prescribed pursuant to this subsection may in a 
civil action in an appropriate Federal court obtain any 
appropriate relief against the Federal Government with respect 
to the violation. Standing to assert a claim or defense under 
this subsection shall be governed by the general rules of 
standing under Article III of the Constitution.
  (5) The Secretary shall prescribe regulations to carry out 
this subsection.

           *       *       *       *       *       *       *


Sec. 2411. Prohibition against interment or memorialization in the 
                    National Cemetery Administration or Arlington 
                    National Cemetery of persons committing Federal or 
                    State capital crimes

  (a)(1) * * *
  (2) In the case of a person described in subsection (b)(1) 
[or (b)(2)], (b)(2), or (b)(4), the prohibition under paragraph 
(1) shall not apply unless written notice of a conviction 
referred to in subsection (b)(1) [or (b)(2)], (b)(2), or 
(b)(4), as the case may be, is received by the appropriate 
Federal official before such official approves an application 
for the interment or memorialization of such person. Such 
written notice shall be furnished to such official by the 
Attorney General, in the case of a Federal [capital] crime, or 
by an appropriate State official, in the case of a State 
[capital] crime.
  (b) A person referred to in subsection (a) is any of the 
following:
          (1) * * *

           *       *       *       *       *       *       *

          (4) A person--
                  (A) who has been convicted of a Federal or 
                State crime causing the person to be a tier III 
                sex offender for purposes of the Sex Offender 
                Registration and Notification Act (42 U.S.C. 
                16901 et seq.);
                  (B) who, for such crime, is sentenced to a 
                minimum of life imprisonment; and
                  (C) whose conviction is final (other than a 
                person whose sentence was commuted by the 
                President or Governor of a State, as the case 
                may be).

           *       *       *       *       *       *       *


Sec. 2414. Communication between Department of Veterans Affairs and 
                    medical examiners and funeral directors

  (a) Required Information.--With respect to each deceased 
veteran described in subsection (b) who is transported to a 
national cemetery for burial, the Secretary shall ensure that 
the local medical examiner, funeral director, county service 
group, or other entity responsible for the body of the deceased 
veteran before such transportation submits to the Secretary the 
following information:
          (1) Whether the deceased veteran was cremated.
          (2) The steps taken to ensure that the deceased 
        veteran has no next of kin.
  (b) Deceased Veteran Described.--A deceased veteran described 
in this subsection is a deceased veteran whom the Secretary 
determines--
          (1) that there is no next of kin or other person 
        claiming the body of the deceased veteran; and
          (2) does not have sufficient resources to cover 
        burial and funeral expenses.
  (c) Determination of Sufficient Resources.--If the Secretary 
is unable to make a reasonable determination of the amount of 
the resources of a deceased veteran under subsection (b)(2), 
the Secretary shall deem such resources to be an amount that is 
not sufficient to cover burial and funeral expenses.

           *       *       *       *       *       *       *


PART IV--GENERAL ADMINISTRATIVE PROVISIONS

           *       *       *       *       *       *       *


           CHAPTER 55--MINORS, INCOMPETENTS, AND OTHER WARDS

Sec.
5501. Commitment actions.
[5502. Payments to and supervision of fiduciaries.]
5502. Appointment of fiduciaries.
5502A. Supervision of fiduciaries.
     * * * * * * *
[5509. Authority to require fiduciary to receive payments at regional 
          offices of the Department when failing to provide required 
          accounting.]
5509. Annual reports and accountings of fiduciaries.
     * * * * * * *

[Sec. 5502. Payments to and supervision of fiduciaries

  [(a)(1) Where it appears to the Secretary that the interest 
of the beneficiary would be served thereby, payment of benefits 
under any law administered by the Secretary may be made 
directly to the beneficiary or to a relative or some other 
fiduciary for the use and benefit of the beneficiary, 
regardless of any legal disability on the part of the 
beneficiary. Where, in the opinion of the Secretary, any 
fiduciary receiving funds on behalf of a Department beneficiary 
is acting in such a number of cases as to make it impracticable 
to conserve properly the estates or to supervise the persons of 
the beneficiaries, the Secretary may refuse to make future 
payments in such cases as the Secretary may deem proper.
  [(2) In a case in which the Secretary determines that a 
commission is necessary in order to obtain the services of a 
fiduciary in the best interests of a beneficiary, the Secretary 
may authorize a fiduciary appointed by the Secretary to obtain 
from the beneficiary's estate a reasonable commission for 
fiduciary services rendered, but the commission for any year 
may not exceed 4 percent of the monetary benefits under laws 
administered by the Secretary paid on behalf of the beneficiary 
to the fiduciary during such year. A commission may not be 
authorized for a fiduciary who receives any other form of 
remuneration or payment in connection with rendering fiduciary 
services for benefits under this title on behalf of the 
beneficiary.
  [(b) Whenever it appears that any fiduciary, in the opinion 
of the Secretary, is not properly executing or has not properly 
executed the duties of the trust of such fiduciary or has 
collected or paid, or is attempting to collect or pay, fees, 
commissions, or allowances that are inequitable or in excess of 
those allowed by law for the duties performed or expenses 
incurred, or has failed to make such payments as may be 
necessary for the benefit of the ward or the dependents of the 
ward, then the Secretary may appear, by the Secretary's 
authorized attorney, in the court which has appointed such 
fiduciary, or in any court having original, concurrent, or 
appellate jurisdiction over said cause, and make proper 
presentation of such matters. The Secretary, in the Secretary's 
discretion, may suspend payments to any such fiduciary who 
shall neglect or refuse, after reasonable notice, to render an 
account to the Secretary from time to time showing the 
application of such payments for the benefit of such 
incompetent or minor beneficiary, or who shall neglect or 
refuse to administer the estate according to law. The Secretary 
may require the fiduciary, as part of such account, to disclose 
any additional financial information concerning the beneficiary 
(except for information that is not available to the 
fiduciary). The Secretary may appear or intervene by the 
Secretary's duly authorized attorney in any court as an 
interested party in any litigation instituted by the Secretary 
or otherwise, directly affecting money paid to such fiduciary 
under this section.
  [(c) Authority is hereby granted for the payment of any court 
or other expenses incident to any investigation or court 
proceeding for the appointment of any fiduciary or other person 
for the purpose of payment of benefits payable under laws 
administered by the Secretary or the removal of such fiduciary 
and appointment of another, and of expenses in connection with 
the administration of such benefits by such fiduciaries, or in 
connection with any other court proceeding hereby authorized, 
when such payment is authorized by the Secretary.
  [(d) All or any part of any benefits the payment of which is 
suspended or withheld under this section may, in the discretion 
of the Secretary, be paid temporarily to the person having 
custody and control of the incompetent or minor beneficiary, to 
be used solely for the benefit of such beneficiary, or, in the 
case of an incompetent veteran, may be apportioned to the 
dependent or dependents, if any, of such veteran. Any part not 
so paid and any funds of a mentally incompetent or insane 
veteran not paid to the chief officer of the institution in 
which such veteran is a patient nor apportioned to the 
veteran's dependent or dependents may be ordered held in the 
Treasury to the credit of such beneficiary. All funds so held 
shall be disbursed under the order and in the discretion of the 
Secretary for the benefit of such beneficiary or the 
beneficiary's dependents. Any balance remaining in such fund to 
the credit of any beneficiary may be paid to the beneficiary if 
the beneficiary recovers and is found competent, or if a minor, 
attains majority, or otherwise to the beneficiary's fiduciary, 
or, in the event of the beneficiary's death, to the 
beneficiary's personal representative, except as otherwise 
provided by law; however, payment will not be made to the 
beneficiary's personal representative if, under the law of the 
beneficiary's last legal residence, the beneficiary's estate 
would escheat to the State. In the event of the death of a 
mentally incompetent or insane veteran, all gratuitous benefits 
under laws administered by the Secretary deposited before or 
after August 7, 1959, in the personal funds of patients trust 
fund on account of such veteran shall not be paid to the 
personal representative of such veteran, but shall be paid to 
the following persons living at the time of settlement, and in 
the order named: The surviving spouse, the children (without 
regard to age or marital status) in equal parts, and the 
dependent parents of such veteran, in equal parts. If any 
balance remains, such balance shall be deposited to the credit 
of the applicable current appropriation; except that there may 
be paid only so much of such balance as may be necessary to 
reimburse a person (other than a political subdivision of the 
United States) who bore the expenses of last sickness or burial 
of the veteran for such expenses. No payment shall be made 
under the two preceding sentences of this subsection unless 
claim therefor is filed with the Secretary within five years 
after the death of the veteran, except that, if any person so 
entitled under said two sentences is under legal disability at 
the time of death of the veteran, such five-year period of 
limitation shall run from the termination or removal of the 
legal disability.
  [(e) Any funds in the hands of a fiduciary appointed by a 
State court or the Secretary derived from benefits payable 
under laws administered by the Secretary, which under the law 
of the State wherein the beneficiary had last legal residence 
would escheat to the State, shall escheat to the United States 
and shall be returned by such fiduciary, or by the personal 
representative of the deceased beneficiary, less legal expenses 
of any administration necessary to determine that an escheat is 
in order, to the Department, and shall be deposited to the 
credit of the applicable revolving fund, trust fund, or 
appropriation.]

Sec. 5502. Appointment of fiduciaries

  (a) Appointment.--(1) Where it appears to the Secretary that 
the interest of the beneficiary would be served thereby, 
payment of benefits under any law administered by the Secretary 
may be made directly to the beneficiary or to a relative or 
some other fiduciary for the use and benefit of the 
beneficiary, regardless of any legal disability on the part of 
the beneficiary.
  (2) When in the opinion of the Secretary, a temporary 
fiduciary is needed in order to protect the benefits provided 
to the beneficiary under any law administered by the Secretary 
while a determination of incompetency is being made or appealed 
or a fiduciary is appealing a determination of misuse, the 
Secretary may appoint one or more temporary fiduciaries for a 
period not to exceed 120 days. If a final decision has not been 
made within 120 days, the Secretary may not continue the 
appointment of the fiduciary without obtaining a court order 
for appointment of a guardian, conservator, or other fiduciary 
under the authority provided in section 5502(b) of this title.
  (b) Appeals.--(1) If the Secretary determines a beneficiary 
to be mentally incompetent for purposes of appointing a 
fiduciary under this chapter, the Secretary shall provide such 
beneficiary with a written statement detailing the reasons for 
such determination.
  (2) A beneficiary whom the Secretary has determined to be 
mentally incompetent for purposes of appointing a fiduciary 
under this chapter may appeal such determination.
  (c) Modification.--(1) A beneficiary for whom the Secretary 
appoints a fiduciary under this chapter may, at any time, 
request the Secretary to--
          (A) remove the fiduciary so appointed; and
          (B) have a new fiduciary appointed.
  (2) The Secretary shall comply with a request under paragraph 
(1) unless the Secretary determines that the request is not 
made in good faith.
  (3) The Secretary shall ensure that any removal or new 
appointment of a fiduciary under paragraph (1) does not delay 
or interrupt the beneficiary's receipt of benefits administered 
by the Secretary.
  (d) Independence.--A fiduciary appointed by the Secretary 
shall operate independently of the Department to determine the 
actions that are in the interest of the beneficiary.
  (e) Predesignation.--A veteran may predesignate a fiduciary 
by--
          (1) submitting written notice to the Secretary of the 
        predesignated fiduciary; or
          (2) submitting a form provided by the Secretary for 
        such purpose.
  (f) Appointment of Non-Predesignated Fiduciary.--If a 
beneficiary designates an individual to serve as a fiduciary 
under subsection (e) and the Secretary appoints an individual 
not so designated as the fiduciary for such beneficiary, the 
Secretary shall notify such beneficiary of--
          (1) the reason why such designated individual was not 
        appointed; and
          (2) the ability of the beneficiary to modify the 
        appointed fiduciary under subsection (c).
  (g) Priority of Appointment.--In appointing a fiduciary under 
this chapter, if a beneficiary does not designate a fiduciary 
pursuant to subsection (e), to the extent possible the 
Secretary shall appoint a person who is--
          (1) a relative of the beneficiary;
          (2) appointed as guardian of the beneficiary by a 
        court of competent jurisdiction; or
          (3) authorized to act on behalf of the beneficiary 
        under a durable power of attorney.

Sec. 5502A. Supervision of fiduciaries

  (a) Commission.--(1)(A) In a case in which the Secretary 
determines that a commission is necessary in order to obtain 
the services of a fiduciary in the best interests of a 
beneficiary, the Secretary may authorize a fiduciary appointed 
by the Secretary to obtain from the monthly benefits provided 
to the beneficiary a reasonable commission for fiduciary 
services rendered, but the commission for any month may not 
exceed the lesser of the following amounts:
  (i) The amount that equals three percent of the monthly 
monetary benefits under laws administered by the Secretary paid 
on behalf of the beneficiary to the fiduciary.
  (ii) $35.
  (B) A commission paid under this paragraph may not be derived 
from any award to a beneficiary regarding back pay or 
retroactive benefits payments.
  (C) A commission may not be authorized for a fiduciary who 
receives any other form of remuneration or payment in 
connection with rendering fiduciary services for benefits under 
this title on behalf of the beneficiary.
  (D) In accordance with section 6106 of this title, a 
commission may not be paid to a fiduciary if the Secretary 
determines that the fiduciary misused any benefit payments of a 
beneficiary.
  (E) If the Secretary determines that the fiduciary has 
misused any benefit or payments of a beneficiary, the Secretary 
may revoke the fiduciary status of the fiduciary.
  (2) Where, in the opinion of the Secretary, any fiduciary 
receiving funds on behalf of a Department beneficiary is acting 
in such a number of cases as to make it impracticable to 
conserve properly the estates or to supervise the persons of 
the beneficiaries, the Secretary may refuse to make future 
payments in such cases as the Secretary may deem proper.
  (b) Court.--Whenever it appears that any fiduciary, in the 
opinion of the Secretary, is not properly executing or has not 
properly executed the duties of the trust of such fiduciary or 
has collected or paid, or is attempting to collect or pay, 
fees, commissions, or allowances that are inequitable or in 
excess of those allowed by law for the duties performed or 
expenses incurred, or has failed to make such payments as may 
be necessary for the benefit of the ward or the dependents of 
the ward, then the Secretary may appear, by the Secretary's 
authorized attorney, in the court which has appointed such 
fiduciary, or in any court having original, concurrent, or 
appellate jurisdiction over said cause, and make proper 
presentation of such matters. The Secretary, in the Secretary's 
discretion, may suspend payments to any such fiduciary who 
shall neglect or refuse, after reasonable notice, to render an 
account to the Secretary from time to time showing the 
application of such payments for the benefit of such 
incompetent or minor beneficiary, or who shall neglect or 
refuse to administer the estate according to law. The Secretary 
may require the fiduciary, as part of such account, to disclose 
any additional financial information concerning the beneficiary 
(except for information that is not available to the 
fiduciary). The Secretary may appear or intervene by the 
Secretary's duly authorized attorney in any court as an 
interested party in any litigation instituted by the Secretary 
or otherwise, directly affecting money paid to such fiduciary 
under this section.
  (c) Payment of Certain Expenses.--Authority is hereby granted 
for the payment of any court or other expenses incident to any 
investigation or court proceeding for the appointment of any 
fiduciary or other person for the purpose of payment of 
benefits payable under laws administered by the Secretary or 
the removal of such fiduciary and appointment of another, and 
of expenses in connection with the administration of such 
benefits by such fiduciaries, or in connection with any other 
court proceeding hereby authorized, when such payment is 
authorized by the Secretary.
  (d) Temporary Payment of Benefits.--All or any part of any 
benefits the payment of which is suspended or withheld under 
this section may, in the discretion of the Secretary, be paid 
temporarily to the person having custody and control of the 
incompetent or minor beneficiary, to be used solely for the 
benefit of such beneficiary, or, in the case of an incompetent 
veteran, may be apportioned to the dependent or dependents, if 
any, of such veteran. Any part not so paid and any funds of a 
mentally incompetent or insane veteran not paid to the chief 
officer of the institution in which such veteran is a patient 
nor apportioned to the veteran's dependent or dependents may be 
ordered held in the Treasury to the credit of such beneficiary. 
All funds so held shall be disbursed under the order and in the 
discretion of the Secretary for the benefit of such beneficiary 
or the beneficiary's dependents. Any balance remaining in such 
fund to the credit of any beneficiary may be paid to the 
beneficiary if the beneficiary recovers and is found competent, 
or if a minor, attains majority, or otherwise to the 
beneficiary's fiduciary, or, in the event of the beneficiary's 
death, to the beneficiary's personal representative, except as 
otherwise provided by law; however, payment will not be made to 
the beneficiary's personal representative if, under the law of 
the beneficiary's last legal residence, the beneficiary's 
estate would escheat to the State. In the event of the death of 
a mentally incompetent or insane veteran, all gratuitous 
benefits under laws administered by the Secretary deposited 
before or after August 7, 1959, in the personal funds of 
patients trust fund on account of such veteran shall not be 
paid to the personal representative of such veteran, but shall 
be paid to the following persons living at the time of 
settlement, and in the order named: The surviving spouse, the 
children (without regard to age or marital status) in equal 
parts, and the dependent parents of such veteran, in equal 
parts. If any balance remains, such balance shall be deposited 
to the credit of the applicable current appropriation; except 
that there may be paid only so much of such balance as may be 
necessary to reimburse a person (other than a political 
subdivision of the United States) who bore the expenses of last 
sickness or burial of the veteran for such expenses. No payment 
shall be made under the two preceding sentences of this 
subsection unless claim therefor is filed with the Secretary 
within five years after the death of the veteran, except that, 
if any person so entitled under said two sentences is under 
legal disability at the time of death of the veteran, such 
five-year period of limitation shall run from the termination 
or removal of the legal disability.
  (e) Escheatment.--Any funds in the hands of a fiduciary 
appointed by a State court or the Secretary derived from 
benefits payable under laws administered by the Secretary, 
which under the law of the State wherein the beneficiary had 
last legal residence would escheat to the State, shall escheat 
to the United States and shall be returned by such fiduciary, 
or by the personal representative of the deceased beneficiary, 
less legal expenses of any administration necessary to 
determine that an escheat is in order, to the Department, and 
shall be deposited to the credit of the applicable revolving 
fund, trust fund, or appropriation.

           *       *       *       *       *       *       *


Sec. 5506. Definition of ``fiduciary''

  [For purposes] (a) For purposes of this chapter and chapter 
61 of this title, the term ``fiduciary'' means--
          (1) * * *

           *       *       *       *       *       *       *

  (b)(1) For purposes of subsection (a), the term ``person'' 
includes any--
          (A) State or local government agency whose mission is 
        to carry out income maintenance, social service, or 
        health care-related activities;
          (B) any State or local government agency with 
        fiduciary responsibilities; or
          (C) any nonprofit social service agency that the 
        Secretary determines--
                  (i) regularly provides services as a 
                fiduciary concurrently to five or more 
                individuals; and
                  (ii) is not a creditor of any such 
                individual.
  (2) The Secretary shall maintain a list of State or local 
agencies and nonprofit social service agencies under paragraph 
(1) that are qualified to act as a fiduciary under this 
chapter. In maintaining such list, the Secretary may consult 
the lists maintained under section 807(h) of the Social 
Security Act (42 U.S.C. 1007(h)).

[Sec. 5507. Inquiry, investigations, and qualification of fiduciaries

  [(a) Any certification of a person for payment of benefits of 
a beneficiary to that person as such beneficiary's fiduciary 
under section 5502 of this title shall be made on the basis 
of--
          [(1) an inquiry or investigation by the Secretary of 
        the fitness of that person to serve as fiduciary for 
        that beneficiary, such inquiry or investigation--
                  [(A) to be conducted in advance of such 
                certification;
                  [(B) to the extent practicable, to include a 
                face-to-face interview with such person; and
                  [(C) to the extent practicable, to include a 
                copy of a credit report for such person issued 
                within one year of the date of the proposed 
                appointment;
          [(2) adequate evidence that certification of that 
        person as fiduciary for that beneficiary is in the 
        interest of such beneficiary (as determined by the 
        Secretary under regulations); and
          [(3) the furnishing of any bond that may be required 
        by the Secretary.
  [(b) As part of any inquiry or investigation of any person 
under subsection (a), the Secretary shall request information 
concerning whether that person has been convicted of any 
offense under Federal or State law which resulted in 
imprisonment for more than one year. If that person has been 
convicted of such an offense, the Secretary may certify the 
person as a fiduciary only if the Secretary finds that the 
person is an appropriate person to act as fiduciary for the 
beneficiary concerned under the circumstances.
  [(c)(1) In the case of a proposed fiduciary described in 
paragraph (2), the Secretary, in conducting an inquiry or 
investigation under subsection (a)(1), may carry out such 
inquiry or investigation on an expedited basis that may include 
waiver of any specific requirement relating to such inquiry or 
investigation, including the otherwise applicable provisions of 
subparagraphs (A), (B), and (C) of such subsection. Any such 
inquiry or investigation carried out on such an expedited basis 
shall be carried out under regulations prescribed for purposes 
of this section.
  [(2) Paragraph (1) applies with respect to a proposed 
fiduciary who is--
          [(A) the parent (natural, adopted, or stepparent) of 
        a beneficiary who is a minor;
          [(B) the spouse or parent of an incompetent 
        beneficiary;
          [(C) a person who has been appointed a fiduciary of 
        the beneficiary by a court of competent jurisdiction; 
        or
          [(D) being appointed to manage an estate where the 
        annual amount of veterans benefits to be managed by the 
        proposed fiduciary does not exceed $3,600, as adjusted 
        pursuant to section 5312 of this title.
  [(d) Temporary Fiduciaries.--When in the opinion of the 
Secretary, a temporary fiduciary is needed in order to protect 
the assets of the beneficiary while a determination of 
incompetency is being made or appealed or a fiduciary is 
appealing a determination of misuse, the Secretary may appoint 
one or more temporary fiduciaries for a period not to exceed 
120 days. If a final decision has not been made within 120 
days, the Secretary may not continue the appointment of the 
fiduciary without obtaining a court order for appointment of a 
guardian, conservator, or other fiduciary under the authority 
provided in section 5502(b) of this title.]

Sec. 5507. Inquiry, investigations, and qualification of fiduciaries

  (a) Investigation.--Any certification of a person for payment 
of benefits of a beneficiary to that person as such 
beneficiary's fiduciary under section 5502 of this title shall 
be made on the basis of--
          (1) an inquiry or investigation by the Secretary of 
        the fitness of that person to serve as fiduciary for 
        that beneficiary to be conducted in advance of such 
        certification and in accordance with subsection (b);
          (2) adequate evidence that certification of that 
        person as fiduciary for that beneficiary is in the 
        interest of such beneficiary (as determined by the 
        Secretary under regulations);
          (3) adequate evidence that the person to serve as 
        fiduciary protects the private information of a 
        beneficiary in accordance with subsection (d)(1); and
          (4) the furnishing of any bond that may be required 
        by the Secretary, in accordance with subsection (f).
  (b) Elements of Investigation.--(1) In conducting an inquiry 
or investigation of a proposed fiduciary under subsection 
(a)(1), the Secretary shall conduct--
          (A) a face-to-face interview with the proposed 
        fiduciary by not later than 30 days after the date on 
        which such inquiry or investigation begins; and
          (B) a background check of the proposed fiduciary to--
                  (i) in accordance with paragraph (2), 
                determine whether the proposed fiduciary has 
                been convicted of a crime; and
                  (ii) determine whether the proposed fiduciary 
                will serve the best interest of the 
                beneficiary, including by conducting a credit 
                check of the proposed fiduciary and checking 
                the records under paragraph (5).
  (2) The Secretary shall request information concerning 
whether that person has been convicted of any offense under 
Federal or State law. If that person has been convicted of such 
an offense, the Secretary may certify the person as a fiduciary 
only if the Secretary finds that the person is an appropriate 
person to act as fiduciary for the beneficiary concerned under 
the circumstances.
  (3) The Secretary shall conduct the background check 
described in paragraph (1)(B)--
          (A) each time a person is proposed to be a fiduciary, 
        regardless of whether the person is serving or has 
        served as a fiduciary; and
          (B) at no expense to the beneficiary.
  (4) Each proposed fiduciary shall disclose to the Secretary 
the number of beneficiaries that the fiduciary acts on behalf 
of.
  (5) The Secretary shall maintain records of any person who 
has--
          (A) previously served as a fiduciary; and
          (B) had such fiduciary status revoked by the 
        Secretary.
  (6)(A) If a fiduciary appointed by the Secretary is convicted 
of a crime described in subparagraph (B), the Secretary shall 
notify the beneficiary of such conviction by not later than 14 
days after the date on which the Secretary learns of such 
conviction.
  (B) A crime described in this subparagraph is a crime--
          (i) for which the fiduciary is convicted while 
        serving as a fiduciary for any person;
          (ii) that is not included in a report submitted by 
        the fiduciary under section 5509(a) of this title; and
          (iii) that the Secretary determines could affect the 
        ability of the fiduciary to act on behalf of the 
        beneficiary.
  (c) Investigation of Certain Persons.--(1) In the case of a 
proposed fiduciary described in paragraph (2), the Secretary, 
in conducting an inquiry or investigation under subsection 
(a)(1), may carry out such inquiry or investigation on an 
expedited basis that may include giving priority to conducting 
such inquiry or investigation. Any such inquiry or 
investigation carried out on such an expedited basis shall be 
carried out under regulations prescribed for purposes of this 
section.
  (2) Paragraph (1) applies with respect to a proposed 
fiduciary who is--
          (A) the parent (natural, adopted, or stepparent) of a 
        beneficiary who is a minor;
          (B) the spouse or parent of an incompetent 
        beneficiary;
          (C) a person who has been appointed a fiduciary of 
        the beneficiary by a court of competent jurisdiction;
          (D) being appointed to manage an estate where the 
        annual amount of veterans benefits to be managed by the 
        proposed fiduciary does not exceed $3,600, as adjusted 
        pursuant to section 5312 of this title; or
          (E) a person who is authorized to act on behalf of 
        the beneficiary under a durable power of attorney.
  (d) Protection of Private Information.--(1) A fiduciary shall 
take all reasonable precautions to--
          (A) protect the private information of a beneficiary, 
        including personally identifiable information; and
          (B) securely conducts financial transactions.
  (2) A fiduciary shall notify the Secretary of any action of 
the fiduciary that compromises or potentially compromises the 
private information of a beneficiary.
  (e) Potential Misuse of Funds.--(1) If the Secretary has 
reason to believe that a fiduciary may be misusing all or part 
of the benefit of a beneficiary, the Secretary shall--
          (A) conduct a thorough investigation to determine the 
        veracity of such belief; and
          (B) if such veracity is established, transmit to the 
        officials described in paragraph (2) a report of such 
        investigation.
  (2) The officials described in this paragraph are the 
following:
          (A) The Attorney General.
          (B) Each head of a Federal department or agency that 
        pays to a fiduciary or other person benefits under any 
        law administered by such department of agency for the 
        use and benefit of a minor, incompetent, or other 
        beneficiary.
  (f) Bond.--In requiring the furnishing of a bond under 
subsection (a)(4), the Secretary shall--
          (1) ensure that any such bond is not paid using any 
        funds of the beneficiary; and
          (2) consider--
                  (A) the care a proposed fiduciary has taken 
                to protect the interests of the beneficiary; 
                and
                  (B) the capacity of the proposed fiduciary to 
                meet the financial requirements of the bond 
                without sustaining hardship.
  (g) List of Fiduciaries.--Each regional office of the 
Veterans Benefits Administration shall maintain a list of the 
following:
          (1) The name and contact information of each 
        fiduciary, including address, telephone number, and 
        email address.
          (2) With respect to each fiduciary described in 
        paragraph (1)--
                  (A) the date of the most recent background 
                check and credit check performed by the 
                Secretary under this section;
                  (B) the date that any bond was paid under 
                this section;
                  (C) the name, address, and telephone number 
                of each beneficiary the fiduciary acts on 
                behalf of; and
                  (D) the amount that the fiduciary controls 
                with respect to each beneficiary described in 
                subparagraph (C).

           *       *       *       *       *       *       *


Sec. 5509. [Authority to require fiduciary to receive payments at 
                    regional offices of the Department when failing to 
                    provide required accounting] Annual reports and 
                    accountings of fiduciaries

  (a) Required Reports and Accountings.--The Secretary [may 
require a fiduciary to file a], subject to regulations 
prescribed pursuant to subsection (f), shall require a 
fiduciary to file an annual report or accounting pursuant to 
regulations prescribed by the Secretary. The Secretary shall 
transmit such annual report or accounting to the beneficiary 
and any legal guardian of such beneficiary.

           *       *       *       *       *       *       *

  (c) Matters Included.--An annual report or accounting under 
subsection (a) shall include the following:
          (1) For each beneficiary that a fiduciary acts on 
        behalf of--
                  (A) the amount of the benefits of the 
                beneficiary accrued during the year, the amount 
                spent, and the amount remaining; and
                  (B) if the fiduciary serves the beneficiary 
                with respect to benefits not administered by 
                the Secretary, an accounting of all sources of 
                benefits or other income the fiduciary oversees 
                for the beneficiary.
          (2) A list of events that occurred during the year 
        covered by the report that could affect the ability of 
        the fiduciary to act on behalf of the beneficiary, 
        including--
                  (A) the fiduciary being convicted of any 
                crime;
                  (B) the fiduciary declaring bankruptcy; and
                  (C) any judgments entered against the 
                fiduciary.
  (d) Random Audits.--The Secretary shall annually conduct 
random audits of fiduciaries who receive a commission pursuant 
to subsection 5502A(a)(1) of this title.
  (e) Status of Fiduciary.--If a fiduciary includes in the 
annual report events described in subsection (c)(2), the 
Secretary may take appropriate action to adjust the status of 
the fiduciary as the Secretary determines appropriate, 
including by revoking the fiduciary status of the fiduciary.
  (f) Regulations.--(1) In prescribing regulations to carry out 
this section, the Secretary, in consultation with the Under 
Secretary for Benefits and the Under Secretary for Health, 
shall ensure that the care provided by a fiduciary described in 
paragraph (2) to a beneficiary is not diminished or otherwise 
worsened by the fiduciary complying with this section.
  (2) A fiduciary described in this paragraph is a fiduciary 
who, in addition to acting as a fiduciary for a beneficiary, 
provides care to the beneficiary pursuant to this title 
(including such care provided under section 1720G of this 
title).

Sec. 5510. Annual report

  [The Secretary shall include in the Annual Benefits Report of 
the Veterans Benefits Administration or the Secretary's Annual 
Performance and Accountability Report] Not later than July 1 of 
each year, the Secretary shall submit to the Committees on 
Veterans' Affairs of the House of Representatives and the 
Senate a separate report containing information concerning 
fiduciaries who have been appointed to receive payments for 
beneficiaries of the Department. As part of such information, 
the Secretary shall separately set forth the following:
          (1) * * *

           *       *       *       *       *       *       *


                 CHAPTER 57--RECORDS AND INVESTIGATIONS

                          SUBCHAPTER I--RECORDS

Sec.
5701.  Confidential nature of claims.
     * * * * * * *

                  SUBCHAPTER III--INFORMATION SECURITY

     * * * * * * *
5724A. Data breach notification.
     * * * * * * *

SUBCHAPTER III--INFORMATION SECURITY

           *       *       *       *       *       *       *


Sec. 5724A. Data breach notification

  (a) Notification Requirement.--Except as provided in 
subsection (d), in the event of a data breach with respect to 
sensitive personal information that is processed or maintained 
by the Secretary, by not later than 10 business days after the 
date on which the Secretary learns of the data breach, the 
Secretary shall notify the appropriate committees of Congress 
and each individual whose sensitive personal information is 
involved in the data breach is notified of the data breach. If 
the Secretary determines that providing such notification 
within 10 business days is not feasible due to circumstances 
necessary to accurately identify the individuals whose 
sensitive personal information is involved in the data breach 
or to prevent further breach or unauthorized disclosure and 
reasonably restore the integrity of the data system the 
Secretary shall provide such notification not later than 15 
business days after the date on which the Secretary learns of 
the data breach.
  (b) Contracts for Data Processing or Maintenance.--If the 
Secretary enters into a contract for the performance of any 
Department function that requires access to sensitive personal 
information, the Secretary shall require as a condition of the 
contract that the contractor agree to provide notification of 
data breaches in the same manner as required of the Secretary 
under subsection (a).
  (c) Method and Content of Notification.--(1) Notification 
provided to an individual under subsection (a) shall be 
provided clearly and conspicuously by one of the following 
methods:
          (A) Written notification.
          (B) Notification by email or other electronic means, 
        if the Secretary's primary method of communication with 
        the individual is by email or such other electronic 
        means.
  (2) Regardless of the method by which notification is 
provided to an individual under paragraph (1), such 
notification shall include--
          (A) a description of the sensitive personal 
        information involved in the data breach;
          (B) a telephone number that the individual may use, 
        at no cost to the individual, to contact an appropriate 
        employee of the Department to inquire about the data 
        breach or the individual's sensitive personal 
        information maintained by the Department;
          (C) notice that the individual is entitled to 
        receive, at no cost to such individual, credit 
        protection services under section 5724 of this title;
          (D) the toll-free contact telephone numbers and 
        addresses for the major credit reporting agencies; and
          (E) a toll-free telephone number and website address 
        whereby the individual may obtain information regarding 
        identity theft.
  (d) Notification of General Public.--The Secretary, acting 
through the Office of Public Affairs of the Department, shall 
notify the general public concerning any data breach involving 
sensitive personal information by not later than 10 business 
days after the date on which the Secretary learns of the data 
breach, unless the Secretary determines that to do so is not 
feasible due to circumstances necessary to accurately identify 
the individuals whose sensitive personal information is 
involved in the data breach or to prevent further breach or 
unauthorized disclosure and reasonably restore the integrity of 
the data system, such notification shall be made as soon as 
possible.
  (e) Appropriate Committees of Congress.--In this section, the 
term ``appropriate committees of Congress'' means the Committee 
on Veterans Affairs' of the House of Representatives and the 
Committee on Veterans' Affairs of the Senate.

           *       *       *       *       *       *       *


                    CHAPTER 59--AGENTS AND ATTORNEYS

Sec.
5901. Prohibition against acting as claims agent or attorney.
     * * * * * * *
5906. Provision of access to case-tracking information.

           *       *       *       *       *       *       *


Sec. 5906. Provision of access to case-tracking information

  (a) In General.--(1) In accordance with subsection (b), the 
Secretary shall provide a covered employee with access to the 
case-tracking system to provide a veteran with information 
regarding the status of a claim submitted by such veteran, 
regardless of whether such employee is acting under a power of 
attorney executed by such veteran.
  (2) In providing a covered employee with access to the case-
tracking system under paragraph (1), the Secretary shall 
ensure--
          (A) that such access--
                  (i) is provided in a manner that does not 
                allow such employee to modify the data 
                contained in such system; and
                  (ii) does not include access to medical 
                records; and
          (B) that each time a covered employee accesses such 
        system, the employee must certify that such access is 
        for official purposes only.
  (b) Privacy Certification Course.--The Secretary may not 
provide a covered employee with access to the case-tracking 
system under subsection (a)(1) unless the covered employee has 
successfully completed a certification course on privacy issues 
provided by the Secretary.
  (c) Treatment of Disclosure.--The access to information by a 
covered employee pursuant to subsection (a)(1) shall be deemed 
to be--
          (1) a covered disclosure under section 552a(b) of 
        title 5; and
          (2) a permitted disclosure under regulations 
        promulgated under section 264(c) of the Health 
        Insurance Portability and Accountability Act of 1996 
        (42 U.S.C. 1320d-2 note).
  (d) Definitions.--In this section:
          (1) The term ``case-tracking system'' means the 
        system of the Department of Veterans Affairs that 
        provides information regarding the status of a claim 
        submitted by a veteran.
          (2) The term ``covered employee'' means--
                  (A) an employee of a Member of Congress who 
                assists the constituents of the Member with 
                issues regarding departments or agencies of the 
                Federal Government; or
                  (B) an employee of a State or local 
                governmental agency (including a veterans 
                service officer) who, in the course of carrying 
                out the responsibilities of such employment, 
                assists veterans with claims for any benefit 
                under the laws administered by the Secretary.

           *       *       *       *       *       *       *


CHAPTER 61--PENAL AND FORFEITURE PROVISIONS

           *       *       *       *       *       *       *


Sec. 6107. Reissuance of benefits

  (a) Negligent Failure by Secretary.--(1) * * *
  (2) There shall be considered to have been a negligent 
failure by the Secretary to investigate and monitor a fiduciary 
in the following cases:
          (A) * * *

           *       *       *       *       *       *       *

          (C) In any other case in which actual negligence is 
        shown, including by the Secretary not acting in 
        accordance with section 5507 of this title.

           *       *       *       *       *       *       *

                              ----------                              


                     VETERANS BENEFITS ACT OF 2003



           *       *       *       *       *       *       *
TITLE VII--OTHER MATTERS

           *       *       *       *       *       *       *


SEC. 704. TEMPORARY AUTHORITY FOR PERFORMANCE OF MEDICAL DISABILITIES 
                    EXAMINATIONS BY CONTRACT PHYSICIANS.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Expiration.--The authority in subsection (a) shall expire 
on [December 31, 2012] December 31, 2017. No examination may be 
carried out under the authority provided in that subsection 
after that date.

           *       *       *       *       *       *       *